What is the difference between term life insurance and life insurance offered by an employer?
I was able to get a good rate on a term life insurance policy with a 20 year term. My workplace life insurace seems similar, but the rates change over time. Are there any other difference or things to think about with comparing these policies?
As far as the coverage goes they are basically the same. When you (or your employer) stop paying or you leave your job, they are both done.
Your employer is buying the group policy sort of at the average rate for all employees, young or old, healthy or not so healthy. So, if you are healthy, don't smoke, have parents that lived to a ripe old age, you should be able to easily find term life insurance cheaper than the group rate. If you smoke and particularly if you have had a signifciant medical problem such as a heart attack or cancer, you may not even be able to get insurance except through your employer's group plan (or at least it could be very expensive). 14 years ago, I was diagnosed with cancer so the only place I could get insurance was through my employer. Now, after 14 years of being cancer free and a non-smoker, I qualify for a prefered rate with most insurance companies. (The way I see it, I cheated the insurance company out of at least 10 years of premiums).
Probably the biggest difference is in who owns the policy. The group policy is owned by your employer. Quit or lose your job, you lose your life insurance. Have your own term policy, the policy goes with you.
Another issue is a tax issue. If you buy a term policy, you will use your own post tax dollars. The group policy is usually an employee benefit and provided free to you up to some multiple of your annual salary. An employer can provide up to $50,000 of term life insurance tax free to an employee, any coverage over $50,000 the premium is taxable to the employee.
Bottom line, not knowing your circumstances, if you are healthy, buy your own term policy and take the employer policy up to the $50,000 limit. If you have a health issue and term insurance is expensive or unavailable, take as much of the employer's insurance as you can get. Try not to change jobs unless your new employer also has group life insurance.
As mentioned above the coverage and sum assured remains the same overall. When the insurance is offered by employer, the employer is responsible for paying the entire premium amount as long the employee is serving the organization. The life insurance policy is cancelled if the employee leave’s the organization.
I know you posted this a long time ago, but I'm just answering anyways incase there are others out there in a similar situation.lol
but first off...That's great that your employer offers you some life insurance, and that you were also able to get a great rate elsewhere. What I would do...is take both! Most employers pay for all the life insurance they offer (or a huge chunk of it) so you might as well take advantage of that discount. But if you don't plan on working till your old age, and especially if you don't plan on retiring at your current company, you should look into your own personal life insurance outside of work...you and your work place may go your separate ways for whatever reason. and if or when that happens, you'll no longer have the life insurance they offered you.
So I would do both. And if you do decide to shop around, personally, QuickBrokers.net works great if you're in Canada. or Kanetics.com if you're in the states. those would be my recommendations.
by Kristin Trapp 8 years ago
What is the difference between whole and term life insurance?Is the amount of time each insurance policy lasts the only difference or are there others? Does age play a role in determining which one is the best type of life insurance for me and my family?
by MomsTreasureChest 6 years ago
What's the difference between term life insurance and whole life insurance?
by pinoyconnection 7 years ago
is life insurance worth it?
by income-protection 9 years ago
You Know What is Term Life Insurance?
by whonunuwho 8 years ago
Do you realize that the insurance you may have is worthless and under scrutiny a waste of money?Why does the average policy holder with term life insurance, need to examine their terms of insurance more closely in content, and many reputable sources that may appear legit?
by Faith Reaper 6 years ago
Should a spouse be able to take out a life insurance policy on their spouse without their knowledge?In light of the Colorado man who allegedly pushed his wealthy wife off a cliff, and who is also now being looked at for his first wife's murder after a car fell on her ...being he had taken out...
Copyright © 2021 Maven Media Brands, LLC and respective content providers on this website. HubPages® is a registered trademark of Maven Coalition, Inc. Other product and company names shown may be trademarks of their respective owners. Maven Media Brands, LLC and respective content providers to this website may receive compensation for some links to products and services on this website.
|HubPages Device ID||This is used to identify particular browsers or devices when the access the service, and is used for security reasons.|
|Login||This is necessary to sign in to the HubPages Service.|
|HubPages Traffic Pixel||This is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.|
|Remarketing Pixels||We may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.|
|Conversion Tracking Pixels||We may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.|