Questions to Ask Before Buying Life Insurance at Work

Written by Ross Quade Published: / Last updated:

Having a life insurance policy in place is a smart financial move. It allows you to provide financial security for your family if something was to happen to you. Many companies offer life insurance that you can buy through work. Buying group insurance through work can be convenient, but there are still things that you should know before you buy. Below are several questions to ask before you buy a life insurance policy through work.

How much life insurance do I need?

The amount of life insurance you need depends upon you and your family. Typically, it’s recommended that you buy ten times the amount of your annual salary. So, if you make $50,000 annually, you should purchase a policy that covers your family for $500,000. Again, the exact amount you’ll need will depend upon your circumstances, such as how many dependents you have and if you have a mortgage or other significant financial obligations. Some individuals need more than ten times their annual salary, while others may need less.

Is there a limit to how much I can buy?

Many companies offer a certain amount of life insurance free of charge. This amount is typically 1 to 2 times your annual salary, so it might not be enough to provide your family with the amount of security you want. There may also be a limit as to how much coverage you can buy, and this amount includes what your employer already provides for free. Let’s say the limit for your coverage is ten times your annual salary. If your employer only covers one year of coverage for free, you can buy up to 9 times your yearly salary. You’ll need to decide if this maximum is enough to meet your needs.

What kind of life insurance am I buying?

In most cases, employers offer term life insurance. This is life insurance that’s only active for a certain number of years. It typically costs less and is enough to provide most families with what they need. Some employers will offer permanent life insurance, which is a policy that’s active for your entire life and includes a cash value.

Can I keep the policy if I leave my job?

This should be the most critical question you should ask. It may be possible to keep the policy, even if you leave your job. Ask if the policy is portable and convertible. Portable means you can take your policy with you and equivalent means that you can turn your group policy into an individual one. You should also find out if the cost of the policy will change or if your coverage changed.

How much will the policy cost?

Again, your employer may provide a certain amount of life insurance for free. The cost you pay will be dependent upon several factors, including how much you buy, your age, and how healthy you are. Going through work can be a very affordable option. It’s important to keep in mind, though, that how much you pay may increase as you get older depending upon the type of policy you get. You might pay less if you go through an outside insurance company though. Before buying life insurance through work, make sure that you get some quotes from different companies so you can compare coverage and costs and make the decision that best suits your family.

Do I have to have a medical exam?

Most all employer paid life insurance plans to require no medical exam.  Of course, there are exceptions to the rule.  With just about any life insurance outside of work, you will almost certainly need a medical exam.  This is how the insurance company knows how healthy you are and how much potential risk you could be in their company.

What about if I smoke?

This questions will almost always be asked whether you get life insurance though your employer or on your own.  Smokers pose a greater risk to insurance companies and because of that insurance premiums will be more expensive.  Some people think they can quit and apply for life insurance, but it just doesn’t work that way.  Most tests can tell if you are a smoker or not.

 Is there a waiting period?

This can be an important factor and will depend on your situation.  But some life insurance policies don’t go into effect immediately.  Be sure to check with your employer to see if there are any waiting periods. The most common waiting periods are 90-days to six months if there is any.

Will the premium ever change?

Premiums may go up with age and other factors.  Most insurance providers will have a laid out structure on why premiums will go up.  Be sure to learn about these ahead of time so you know how this will affect you in the future.

Can I increase the benefit amount?

Life events can change the need to either increase or even decrease your insurance policy. Things like a new child, divorce, or maybe your dependent children are grown now.  These are all good reasons to adjust your benefit amount. Find out when and how you can make changes to your policy.  Generally speaking, most companies will let you make changes once per year unless there is a significant life event that happens.

Buying a life insurance policy at work can be an easy way to get coverage. Just because your job offers it though, that doesn’t mean you have to buy it. Do some research about the policy offered through your job and compare coverage and rates from outside companies. This will help you to get the best policy to meet the needs of you and your family.

About Prime Mutual
About Prime Mutual

Prime Mutual has been helping seniors compare the best final expense insurance companies throughout the United States since 2016. We believe in educating our clients, building trust, and assisting them plan for end of life expenses. With a growing population of seniors in retirement, it is more important than ever to have a financial plan in place to help struggling families honor their loved ones.

This entry was posted in Insurance. Bookmark the permalink.

Leave A Reply