A better question will be “is your employer-provided life insurance enough?”
Here’s why it is usually important to have it supplemented with an individual policy: As part of your employee benefits package, your employer may provide some group term insurance. Granted it is a great perk that some don’t get; it is also important to weigh if it is sufficient to meet your financial needs. Additionally …. what if relying entirely on your employer’s insurance plan to cover you brings other problems?
Problem 1: You Can Lose Your Coverage If Your Job Situation Changes
Nobody wants gaps in their life insurance coverage because they never know when they might need it. Should the day come when you decide to change jobs, get laid off or your work status changes to part-time; you run the risk of losing your employer-provided life insurance.
How certain are you that you will get similar coverage? What if your health changes? And assuming you stay on in your job, what if you company changes the coverage provided? What then?
Problem 2: Coverage Gets Tricky If Your Health Declines
Assuming you rely solely or heavily upon group insurance, and then suffer a medical condition that forces you to leave your job, you may be losing your life insurance coverage just when your family is going to need it the most. It may be too late to purchase your own policy at an affordable rate, if you can get one at all.
Will you want to be handcuffed to your job to keep the life insurance if you experienced a serious-enough health issue?
Problem 3: Employer-Provided Life Insurance May Not Be Your Cheapest Option
What if you are paying more for less? The only way to find out is to find out. You might wanna consider sourcing to identify whether your company insurance really offers the best value for your money. The younger and healthier you are, the more likely you will be to find a better rate elsewhere. Also, unlike the guaranteed level premium term life insurance that you can purchase individually, which costs you the same amount every year for as long as you have the policy, the coverage provided by your employer might get more expensive as you age.
Fun Fact: Assuming you are healthy and a non-smoker, buying a stand-alone policy might be cheaper than taking coverage through your employer!
Problem 3: Your Employer May Not Offer Enough Life Insurance
How much coverage do you have, really? In 2012, a study conducted by the Life Insurance Association Singapore (LIA) on under-insurance identified a $462 billion gap for working Singaporeans and permanent residents. Most of the group coverage provided by our employers is usually insufficient to encompass the total amount we need in times of crisis. For instance, the group insurance policy offers coverage up till $100k, which might be sufficient if you are unmarried and do not have any dependents. However, the amount one requires would be much more if we account for the needs of our loved ones as well.
While there’s no reason not to take advantage of any free or inexpensive life insurance offered by your employer, it probably shouldn’t be your only insurance. Nor should most people rely entirely on the additional life insurance that they can buy through work.
One solution you can consider is to get coverage in the form of an individual term life policy. Term life insurance is designed to cover you for a set period of time—such as 10, 20, or 30 years—and is generally much more affordable than permanent life insurance. Find out how much of your life insurance you should get on your own by connecting to a trusted advisor!
