Q. I am looking for $1 million term life insurance. Should I buy it from my employer during the annual benefits enrollment period?
A. If you have good health and want to save money, don't buy the additional term life coverage from your employer.
First, always take advantage of any free life insurance offer from your employer, but chances are, it has an upper limit, usually at $50K or 1 time of salary.
For the extra life insurance coverage you need, do NOT buy from your employer, for the following 3 reasons:
1. You are subsidizing other employees.
If you have good health, you will be subsidizing your colleagues who are smokers or with poor health. The reason is simple, group life insurance is not subject to physical exam, and it treats everyone the same.
2. Your total cost will be higher.
Unlike any term life insurance you purchase outside of work, which has fixed annual premium, the term life insurance you purchase from your employer will have its premium adjusted each year as you getting older. So when you look at total cost over the life time of the policy, you will end up paying more.
3. You will pay more when you change job.
When you leave your current job in the future, you will end up without an insurance coverage and if you want to buy at that time, you will be forced to pay more because you will be older at that time!
A. If you have good health and want to save money, don't buy the additional term life coverage from your employer.
First, always take advantage of any free life insurance offer from your employer, but chances are, it has an upper limit, usually at $50K or 1 time of salary.
For the extra life insurance coverage you need, do NOT buy from your employer, for the following 3 reasons:
1. You are subsidizing other employees.
If you have good health, you will be subsidizing your colleagues who are smokers or with poor health. The reason is simple, group life insurance is not subject to physical exam, and it treats everyone the same.
2. Your total cost will be higher.
Unlike any term life insurance you purchase outside of work, which has fixed annual premium, the term life insurance you purchase from your employer will have its premium adjusted each year as you getting older. So when you look at total cost over the life time of the policy, you will end up paying more.
3. You will pay more when you change job.
When you leave your current job in the future, you will end up without an insurance coverage and if you want to buy at that time, you will be forced to pay more because you will be older at that time!
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