Group Life Insurance
A common type of life insurance offered by employers is group life insurance. It's cheap because it's actually annual renewable and only pays off if you die while employed. Payments can be deducted right from your pay.
Advantages of Employer Sponsored Life Insurance:
- You may be allowed to convert your group life insurance policy to an individual plan if you're terminated;
- You'll probablu be accepted without passing a medical exam, and maybe no health questions; and
- Group life insurance rates aren't per individual, so the risk is spread out through a diverse group.
Group Life Insurance Limitations:
- Your coverage may end when you retire. When you are old, regular life insurance may be too expensive, then you realize you relied on group life too much.
- The maxmimum death benefits are often minimaml (around $50,000). Popular life insurance amounts are anywhere from x5 to x10 annual salary, mortgage blaance, or all your debts and expenses for several years, but most group life offer only one or two times your annual salary.
- Your employer my end the plan at any time. Life insurance is not mandatory (not a right). When business drops, employers reduce expenses by eliminating non mandatory coverage, like group life insurance.
- Coverage amounts are typically low and usually can't be increased, even for more money.
- If you lose your job, you may lose your group life insurance and can't convert.
Term life insurance is usually bought to cover expenses expire over time, like college, mortgage payments, or childcare. If your employer based policy covers these, ask youself if you have absolute job security. Will your family be able to survive?
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