Do You Need Life Insurance?
The answer to the question is an exclamatory “yes!” With recent economic downslides the benefit programs offered by corporations to its employees has seen a switch from health care benefits to a life insurance program. Employee life benefits may seem good at first but there is a possibility the fine print would unveil some horrid truths such as who the real benefactor is.
Company Life Insurance Benefits
When life insurance is offered as a perk benefit of the employment package it likely will cover burial expenses only and ceilinged out at maybe $10,000. If you have a spouse or children along with mortgage and car payments you can easily see this would be inadequate coverage in the event of untimely death. Some companies will allow you to upgrade the life insurance which is company provided by paying the difference of the upgrade itself.
It would also serve you well to have an attorney read the fine print to understand any clauses that may be in the company policy that would prevent your family benefactor from receiving the face value of the account in a timely fashion without litigation.
Another caution to the wind is that some companies will insure employees for large face values offering the employee a smaller death benefit at no cost to the employee which is enough to cover the burial expense. This type of policy is to insure the company’s investment of employment positions is covered to retrain or hire replacement employees with minimal thought to the deceased employee’s estate. This practice by corporations met with much scrutiny a few years ago but was founded to be above board in that a company has the right to insure its employment investments. If they believe their investment in you is a million dollars or your death would cost production of company business as usual to cost a cool million that that is the face value the company would insure you for with a minimal burial expense being extruded for the employee’s estate.
Another consideration is if the insurance policy truly belongs to you should your employment cease to exist. Can that insurance be continued? Are there clauses in the policy that would give the company access to your insurance?
The very safest way to give yourself and yours peace of mind is to purchase your own supplemental life insurance that meets the needs of you and yours should your death be untimely.
Supplemental Life Insurance
What should a supplemental life insurance policy package include?
Your company life insurance benefit package should be scrutinized to understand exactly what it includes and under what scenarios. Take what you need in life insurance coverage and deduct the value of the company benefit in the worst case scenario and what is left is what of your needs must be met with a supplemental life insurance package.
Untimely death has been used here several times but most all death is untimely. When working out what your life insurance needs are you should consider your needs from today forward based on if you were to pass as soon as you purchased your insurance. Do you have a $300,000 home mortgage, two financed vehicles racking up $60,000, and RV for another $50,000 and three children under ten years of age and a spouse that would have their first priority as caretaker of the children? What is that worth? Your company may provide you burial expense but what are you providing should you be leaving a mountain of debt, a spouse and three children behind?
By breaking insurance packages into several policy types you can assure all the needs of your family provided for and if you live beyond retirement age you have provided a retirement plan for yourself and spouse.
If you’re single and fairly young, supplemental insurance is still a good choice because things change and benefactors can be changed on insurance policies. Planning for the possibilities of life at a young age will save you substantial premium costs versus waiting until you need to provide for the considerations of others when your health may have compromises or your age be a factor.
Insuring a Non-Working Spouse
Whether a spouse works or not the basic coverage of burial expense should be insured either with a term life or whole life policy. If a non-working spouse is the primary caretaker of children they should be insured for the value of their service with cost of living increases factored in should those services become hired services.
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