Your Employer-Provided Life Insurance Isn’t Enough

If you’re like most people, you probably opted for life insurance through an employer, at some point or another. Perhaps it was during your first job and it was an easy, no-think check box. Or maybe, you still have employer-provided coverage, but haven’t put too much thought behind it.

While it may be a first step toward creating a balanced financial plan for yourself, electing an employer-provided plan may not provide the kind of protection that you and your family need. And it can actually cost you more in the long run than if you were to purchase an individual policy. 

Discover why you might want to consider purchasing your own policy. Three differences you need to know between employer-provided insurance versus individual life insurance. (Hint: It belongs to you, not your employer.)

You can get a tailored amount of coverage.

The most common life insurance plans provided by employers only cover up to 1-2 times your annual salary. If you are single with no dependents, this amount may be sufficient. However, if you’re married, have kids, or own a home, this amount might not go very far. 
 

A general rule of thumb is that your life insurance should be equal to 10x your salary.

That may seem like a lot, but when you think about what it would take to pay off your house, fund all the monthly bills, and take care of your children’s educations, it makes sense. 

Your goal should be to ensure that your loved ones can keep on living their lives after your death.

It’s more affordable than you think.

One of the reasons people give for not buying life insurance is that they have competing priorities and the premium payments simply won’t fit within their budget. But many overestimate the cost of a policy – by a lot.¹
 

For example, a healthy non-smoking 30-something male might pay less than $500 per year for a 20-year term policy with a million dollar death benefit¹ Surprised? You’re not alone – it’s a common misconception. 

The fact is, in many cases, individual policies are usually less expensive than life policies provided through your employer. In addition, unlike employer-provided coverage, where premiums (cost) increase each year, premiums for your individual policy will generally not increase as you get older.

You’re in control of your coverage, not someone else.

We all know that nothing stays the same. In the event you change jobs, are laid off or your business stops offering a life insurance benefit altogether, you're left in an awkward place. Because the policy isn’t owned by you, you have limited control over an employer life insurance policy.²

As with most benefits like your health and dental, if your employment ends or the benefit is terminated, your life insurance coverage will end too. And if your health should decline, replacing your life insurance may be difficult and premiums may be significantly higher. Having your own policy will help ensure that your family will be financially protected.
 

The bottom line is that the life insurance available to you through your employer may not be as good a deal as you might think. You are paying more for less coverage than an individual policy can provide. 

The purchase of an individual policy may offer the best overall value for your money and it can be just as easy to apply for as the life insurance coverage provided by your employer. Purchasing your own coverage ensures that you have the amount you need to help safeguard your family’s future - without the worry that it could disappear with a change in your employment status.

Explore your own life insurance options today.

With over 150 years of experience, John Hancock is a leading provider of trusted life insurance products, like John Hancock Life Insurance with Vitality.

Citations: 
  

¹ Forbes: "10 Things you absolutely need to know about life insurance." by Tim Maurer, January 15, 2016 https://www.forbes.com/sites/timmaurer/2016/01/05/10-things-you-absolutely-need-to-know-about-life-insurance/#36e0bc72560c
² USA Today: "Is your life insurance through work enough?" by Alice Holbrook, February 14, 2015,  https://www.usatoday.com/story/money/personalfinance/2015/02/14/nerdwallet-life-insurance/23401007/


Insurance products are issued by: John Hancock Life Insurance Company (U.S.A.), Boston, MA 02116 (not licensed in New York) and John Hancock Life Insurance Company of New York, Valhalla, NY 10595.

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