Iâ€™ve talked to so many people that assume they are all set because their job offers a cheap group life insurance plan. Iâ€™ll be the first to say that if itâ€™s inexpensive I think you ought to take advantage of it. What is a concern to me and should be to you, is putting all of your eggs in that basket. There are some serious downsides to that approach.
That cheap life insurance is great unless there is an EVENT!!!!! No, Iâ€™m not talking about your death. Group insurance will pay like any other life insurance if you die. The events Iâ€™m talking about are things you see going on all the time such as 1. A change in your benefit package or 2. You quit or get fired (or downsized) or 3. You retire.
You will be told by the plan administrator not to worry because you can convert your group policy to a personal policy. What they wonâ€™t tell you while you still have time to plan is how outrageously expensive that converted policy will be. It is going to go from some barely noticeable deduction from your paycheck to a substantial bill every month. You wonâ€™t like what is offered. I guarantee it!
So what to do about it? Always carry some amount of life insurance outside the workplace. Term insurance is inexpensive and guess what? If any of those events take place, your personal term insurance policy will remain just the same. Safe, sane, affordable and guaranteed.
Bottom line. No matter what you are offered at work and no matter how good the deal seems, do the prudent thing and contact your independent life insurance agent and get a personal life insurance policy. You will be so glad you have it because, while those EVENTS used to be rare when folks worked the same job for 40 years, they are more the norm than the exception now.