My employer provides me life insurance coverage, is that enough for me?
In the Philippines, Life insurance benefit from companies is not usually required by the government.
But if your company is wise enough, it is a risk mitigating tool they can use in order to decrease the operational cost if something happens to their workers while at work.
If it is one of your benefits as an employee, then you are one of the lucky few.
Knowing that you have that kind of benefit should not stop there. You should know exactly how much is the death benefit. Is it increasing yearly or remains static forever?
Here is what you need to do:
Go to the HR Department, ask them if you have life insurance coverage provided by the company.
1. How much will your employer give your family in case of death?
Ask for the Death Benefit/Face Amount.
2. What type of plan is it?
- Term or Permanent Plan?
- If permanent plan, ask if traditional or Investment-linked?
- Group insurance or Individual Plan?
3. Who are your beneficiaries?
4. What are the riders included? Are Accident and Disability riders included in the plan?
What are riders? Read here: 7 Life Insurance Riders You Need to Know that could Save Your Life
The death benefit or face amount is the amount your beneficiaries (usually your family) gets in case you die while you are insured.
If after reading this, you called your HR and she told you that you have 500,000 life insurance, the next question is, is that enough?
This post will tell you how much you really need. (Really Important: Don’t skip this post!)
The problem with Employer Sponsored Life Insurance:
1. The life insurance benefit is normally co-terminus with your business.
The benefit stops if (any of the following happens):
- You got fired
- You got laid off
- Your company closed down
- You Resigned
2. It is often a Term Insurance.
Term Insurance does not earn cash values or fund values. You can’t get anything from it on your retirement or in case of emergency.
Why do they get a term insurance instead of a permanent plan?
There is nothing wrong with term insurance, because it is the cheapest they can get for you. Decreasing operational cost is usually important in increasing your company’s profit. They have to cut costs. The most important for them is, you are insured in any way possible.
But in case your company is generous enough and they offer a permanent plan for you, then, this is the next step you should do:
Ask them if possible, in instances that should you get out of the company, if you can bring your plan along with you and continue to pay for it on your own. (This is very important to ask!)
If yes, then, that’s good for you. If not, then, you should make your own plan right away.
3. The company is sometimes part of your beneficiary.
Here’s another thing you need to ask. Is your family the sole beneficiary of your life insurance? Or half of the life policy proceeds would belong to the company, and only half goes to your household?
This is possible since, some companies assigned themselves to be part of the beneficiary of your life insurance. You cannot do anything about this because they are the ones paying for your life insurance plan.
Again, kindly ask nicely. It is your right to know.
What to do to prevent the problems connected with your plan?
Get your own personal life insurance!
If you wait on getting your own until you’re out of the company (Thinking: “I will get my own plan once I get out of the company! I’m still insured as long as I am here!”)
Think again. If you are planning on getting out of your company as you retire, then, you might be too old by then. You might have diseases and conditions that can make yourself uninsurable.
See this post: When is the Right time to Get a Life Insurance Policy?
Getting your own life insurance now locks you in the age and health you got the plan. If you get a permanent plan, it also locks in your premium. You can take it anywhere. You can die anywhere be it in the Himalayas or just anywhere as long as you are paying your premium.
Death is one of the most avoided topics in our society. It is even taboo for some. You might be even shy to ask your employer the questions regarding this that you really need to ask. I totally understand that, but we need to open our mind about it. If you love your family enough, you would want to know how much you will leave behind if we are suddenly taken out of the picture.
Question: How much are you worth should you have died yesterday?
Answer: Death Benefit (given by your company+ Personal life insurance)? __________
Informing you,
Do you want to know more how to get your own personal life insurance? Just contact me here.
Read more:
- How to Compute Company Retirement: What No One Tell you About
- TERM Life insurance, the Cheapest Life insurance Ever!
- How much life insurance Do You EXACTLY need? Here is How to Compute
- 7 Life Insurance Riders You Need to Know that could Save Your Life
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