When you go out to eat at a nice restaurant, do you prefer being able to pick out your meal, or are you fine with the waiter bringing out whatever they have available at the moment?
If you have to buy a new car, do you trust the salesperson to bring you the model, mileage, color and features they recommend, or would you rather have some say and get what you want?
Would you wear clothes that were blindly picked out of your closet on a first date, or do you have some favorite go-to outfits that better showcase your style?
And while everyone has had a bad meal, a car that didn’t last as long as you hoped, or a fashion horror story, we all value the ability to have chosen for ourselves – and more often than not, we got what we wanted and it worked out great.
When it comes to life insurance, you have that same choice. But one of the most common phrases we hear is: “I don’t need life insurance, I already have it through my job.” While life insurance through your employer is a fairly common and good idea, you should take a moment to ask yourself a few questions:
“Is this policy meeting my needs?”
“What happens if my job changes?”
The life insurance that you may have through your employer is typically what’s known as a group policy – generally, a single life insurance contract that provides the same coverage for a large group of people, and how much of the premium is paid by the employer can vary. There are also voluntary policies, which are also employer-provided, but fall to the employee to pay the full premium (at a group rate) to the insurance company.
But with an individual policy, like those offered by AAA Life Insurance Company, you can get a more comprehensive policy that is tailored to meet your exact needs – and you own it. Employer-provided insurance typically pays out one to two times your annual salary. Is that enough? How much life insurance do you need?
A general rule of thumb is to shoot for at least seven times your annual salary. Think about everything that life insurance can pay for: your mortgage, car loan, any additional debts, general living expenses and monthly bills, your funeral and burial costs, future college expenses for any children, and anything else your loved ones may be challenged to pay for if something happened to you. It adds up quickly.
And keep in mind that employer-provided insurance doesn’t come with you if you change jobs. Your employer could also change the option provided to employees, leaving you with less coverage than you’re used to. Or, maybe you have plans to retire early, but still want the additional financial protection for your family. When you sign up for an individual policy, you can pick the length (term) you want it to last, or shoot for a permanent policy that doesn’t expire. (Learn more about those options here.) Now, you’re covered no matter what happens.
The coverage that may be offered by your employer is still a very valuable benefit. In most cases, it’s incredibly convenient: you can often get coverage without a medical exam or health questions (although, if you’re young and healthy, an individual policy could be cheaper), and the cost can be deducted from your paycheck. Combining a group and individual policy is a great way to maximize your benefits and coverage.
AAA Life offers a needs analysis calculator to help determine exactly how much coverage you need, and if you have questions, you can talk to our agents at any time. Or, if you’re ready to get started now, you can do so in a matter of minutes by clicking below.
While age and health are important factors that underwriters will consider, there are other factors as well.
Avoid misconceptions standing in the way of you getting—or keeping—the right coverage.