It’s Personal: Why it Makes Sense to Own an Individual Life Insurance Policy

It’s Personal: Why it Makes Sense to Own an Individual Life Insurance Policy

As open enrollment season approaches, employees are offered a variety of choices for group life insurance coverage for themselves and their families. Evaluating options can be confusing and many employees take the path of least resistance by checking the box for optional life insurance. This choice can lead to higher premiums and limited policy features than what’s available in the internal market.

Getting comfortable with how much coverage is adequate and what types of policies are available necessitates a conversation with someone knowledgeable about life insurance. Because there’s a need to be underwritten for a personally owned policy, it is critical that the communications process starts before the open enrollment period so that the employee understands the costs and product options available to them. There may be situations where, due to health considerations, an optional employer-sponsored plan is the only available option.

Let’s consider an example of how optional coverage might not be adequate to meet the needs of an employee. Suppose an employer offers a typical group life benefit of $50,000 of death benefit free to the employee. That employee has an option to purchase up to $250,000 or 2x their salary up to $250,000. For a 30-year-old healthy employee with a young family, a mortgage and college debt, $250,000 will not last long in the event of an untimely death. You can imagine the difficult choices a surviving spouse might have to consider, such as short selling their home, defaulting on debt or declaring bankruptcy. That same employee could obtain $1,000,000 of coverage for a monthly cost equal to or less than their steaming service.

Since open enrollment creates a focus on the topic of life insurance, employers and insurance professionals have an opportunity to educate employees on the differences between optional group coverage and individually owned coverage. The chart below is a good guide for comparing the two types of plans.

BGS - LIS Article - chart.png

Surveys show that people who purchase life insurance are glad they did. Let’s help employees gain peace of mind by getting them the protection they need.

Connect with one of our trusted advisors today.

It’s Personal: Why it Makes Sense to Own an Individual Life Insurance Policy https://www.cbiz.com/Portals/0/Images/Versatility - Life Insurance.jpg?ver=snm7t3teLsfjo80X6dlYSw%3d%3dSince open enrollment creates a focus on the topic of life insurance, employers and insurance professionals have an opportunity to educate employees on the differences between optional group coverage and individually owned coverage. 2023-09-08T19:00:00-05:00Since open enrollment creates a focus on the topic of life insurance, employers and insurance professionals have an opportunity to educate employees on the differences between optional group coverage and individually owned coverage. NoneNo