As most mature adults know, life insurance is not for the victim, but it’s for those he/she leave(s) behind. Life insurance is not a pleasant topic and it’s natural to avoid when you can but that’s certainly not the responsible thing to do. In order to protect your children while they are young and vulnerable and the surviving spouse, it is necessary to have this protection in case of a crisis event.
Many adults assume they can and will get life insurance through their employer, so why worry about getting it through their financial advisor. At first glance, they are right. As a benefit to their employees, many employers will help pay for life insurance offered to their employees. So for many, end of story, as you will get the necessary life insurance protection through your current employer.
We really need to carefully examine this strategy, as this is a serious issue. In today’s world, employer and employee loyalty is not what it used to be. For the most part, gone are the days when employees commit to one employer for many years and employers return that loyalty. Today, employees may have seven or more career changes. Changes in the marketplace means a paradigm change – a change in how we look at life insurance.
For the average worker, how will the change in the marketplace affect life insurance coverage? Do you employ the same strategy by relying on your employer for life insurance? Conceivably, if you change jobs every six years, do you automatically enroll in your new company’s life insurance policy? What if you have medical issues with one employer and eventually are hired by another? Will you automatically qualify for coverage? For some employers, open enrollment is an option so you can secure life insurance coverage. With other employers, you may be required to have a medical exam. Regardless, if you want to increase your new coverage above a standard amount, it would usually require a medical exam.
What about unemployment? If you quit your job or lose it involuntarily, how will you handle life insurance? Essentially, you have two options. One, you could convert your previous employee’s policy to an individual policy. Of course, premiums are going to be higher after converting to the individual policy. Second, if you decide to change your policy after your previous employment, most plans will require underwriting which means the policyholder will be required to undergo a physical exam. How are you going to pay while you are without work? What do you do if you are not insurable due to a pre-existing condition?
Having a financial advisor who knows you could help you secure adequate life insurance. They are aware of your financial goals and should be able to find you competitive coverage based upon risk factors and your medical history to meet your needs in case you or your spouse dies. Most advisors should be certified to write you a policy that could protect you even during unemployment or gaps in between jobs. Employees may be attracted to obtain life insurance through their employer, which is understandable, but should realize there are options available that may better meet their financial needs.