AAA Life Insurance Company


Life Resources

Learn more about life insurance with these useful materials

Life Resources

Learn more about life insurance with these useful materials

October 2, 2019 // All resources---tips // personal-finance

Is life insurance through your employer enough? Probably not.

“I don’t need life insurance, I already have it through my job.”

We hear some variation of this phrase quite often. And it certainly makes sense. After all, if you have life insurance through work, why would you need more?

There are lots of reasons to get individual life insurance – for instance, your coverage through work may not be enough to cover all your needs or it may not come with you once you leave that job. That’s why we decided to take a deeper dive on the subject matter. But first, here is a quick look at three types of life insurance.

Group – Typically provided by your employer as an employee benefit – keep in mind, not every employer pays the full premium.

Voluntary – Also provided through your employer but the employee typically pays the premium at a group rate.

Individual – A robust policy that can be tailored to fit your exact needs, while it can also provide protection for a specific term length of your choosing.

Group Coverage

This type of life insurance is typically provided by your employer as an employee benefit. While this is a perk, please keep in mind coverage is usually equal to just one or two times your salary or as a lump sum. This may not be enough coverage for you and your family in the long run. Ask yourself: “Would my family be OK with just a year or two of a financial cushion?” In addition, group coverage typically ends when your job does. Or if it’s the type you can convert to permanent insurance and take with you, it can be expensive to do so.

Voluntary Coverage

This is an individual policy offered by your employer where you’re responsible for paying the full premium. There are several things that make this coverage attractive: ease of getting coverage (you are often asked few or no medical questions) and ease of payment (the premium is typically deducted from your paycheck). Once you leave your job, however, you would be responsible for making the premium payments directly to the insurance company – so keeping the policy active is squarely on you.

As mentioned above, life insurance through your employer can be beneficial and serve as a good starting point for coverage. However, the total amount of coverage you can get through your employer will most likely fall short of what you need if you have people who depend on you financially. As a general rule of thumb, 7 times your salary is a good starting place for the amount of recommended life insurance coverage. Do a quick calculation to find out how much you might need with this easy needs analysis calculator. You’ll most likely find you’ll need more coverage. That’s why an individual life insurance policy could be great for you.

Individual Coverage

An individual life insurance policy is one you own and that can be purchased directly from the life insurance company either online or through a licensed agent. Individual coverage is a great asset to consider since so many options can be customized to fit your exact needs while providing you with complete coverage. Often an insurance provider offers two types of insurance policies to choose from: term or permanent life insurance (go ahead and check out the link to see the differences between the two spelled out). Those who are self-employed are encouraged to take a look at individual options, since they most likely do not have the benefit of being covered through an employer.

We hope this painted a better picture of the kinds of life insurance that are available and helps you decide on the right coverage to fit your needs for the now and whatever’s next. If you still have questions, our agents can help you sort through your options or use our life insurance calculator to figure out your exact needs.


3 Reasons to Convert Your Life Insurance Policy

As your life progresses, converting your life insurance policy is something that you may consider.

Read More

8 Reasons to Apply for Life Insurance Sooner Rather than Later

If you’re hesitating about getting life insurance—here are eight reasons to do it today.

Read More

6 questions to ask yourself before buying life insurance

The journey toward added peace of mind starts now.

Read More