Job-Provided Life Insurance - What Could go Wrong?

Job-Provided Life Insurance - What Could go Wrong?

Oct 07, 2016

by Shannon Daugherty, ACS, FLMI, Member Programs Assistant

Many people believe they don’t need personal insurance because they “have insurance through work,” but the following examples may change your mind.

Most of the time you lose your coverage if you lose your job.

Fred, 62, has worked at the local steel company in his hometown of Granite City, IL for 27 years. Last month, the company was bought by U.S. Steel, and they shut down the plant. He had group term life insurance through work, which has no cash value, so he receives no money back. He needs to buy life insurance, but doesn’t have a job. If he had bought life insurance through a company like Western when he was younger, his premiums would have been less (or even paid for by now)! Typically, premiums cost less when you are younger.

Employer stays in business but terminates the benefit.

Olivia, 48, and Grace, 52, worked at a local grocery store. This year the grocery store decided to discontinue the employee group term life insurance benefit that had been provided for 15 years. What can they do?

Beware of sudden health declines that cause a loss of job.

Scott was 64 when he had his first stroke. It paralyzed the right side of his body, and he struggled with his speech. His company was very understanding while he took time off for several months to rehab. He eventually came back to work, but found that it was too difficult to continue. He retired, and one month later had another stroke which took his life. Scott’s life insurance had been through his work and when he retired he did not purchase new life insurance in time. Scott’s wife was left in a serious situation while she was mourning her loss.

Employee group term life insurance policies may not offer enough coverage.

Jack works at Quaker Oats in the accounting department. He has a $10,000 life insurance policy through his job. If he dies, his wife Jill will barely have enough for the funeral. They never stopped to think of how much coverage they needed, because they hadn’t talked to an agent. She can’t afford the house payments on her own salary. What would happen to Jill if something happened to Jack?

Low cost insurance company went out of business.

Martin’s employer, trying to cut costs, chose an insurance company for their group term life. Ten years later, the insurance company went out of business leaving him without life insurance. If Martin would have gone with a steady, long-lasting company like Western Fraternal Life, which has been in business for 119 years, he would have been in better hands.

Interesting fact: When your employer pays the premiums for your group term life insurance, the cost of anything in excess of $50,000 is taxable to the employee. This is not the case when you purchase life insurance for yourself.

Employer provided life insurance is great, but there are many possibilities for gaps in coverage or loss. Keep Western in mind for your family’s financial future!

Category: insurance

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