As an employee, you might feel that employer-provided group life insurance covers all your family’s death benefit needs. It’s tempting to rely solely on group coverage because you may feel there’s no need to spend the money on extra coverage.
Edward Graves of McGill’s Life Insurance explains that a major concern involves the convertibility of employer group coverage. If you are involuntarily terminated from your job in the form of early retirement, bankruptcy, a chronic health impairment, workforce reduction, or other reasons, you may lose some or all of your benefits.
David Theile, Director in Life/Health Product Management at State Farm, says group insurance shouldn’t be the only coverage you own.
“If something happens with a customer’s employment, they may lose their group insurance,” says Theile. “In addition, group insurance may not be convertible until retirement when permanent insurance may be too costly.”
Don’t put all your eggs in one basket. Instead, purchase an individual term policy while you’re still employed. If you become unemployed and have to convert a group plan, you may lose some of the coverage in the conversion process. Owning an individual life insurance policy can help you “fill in the gaps” and replace any protection you lose.