Life cover is definitely a great benefit to have from any employer, but is it enough to replace a personal life policy? Your individual circumstances play a role but generally the answer is no. Here are the reasons why.
Your employer often doesn’t provide enough cover
While you might get life cover as a perk along with your job, the cover is often smaller amounts than you would actually need. You probably need cover of around 10 times your annual salary if you have dependents, and most workplaces simply don’t offer this. It’s a great add-on to have even at smaller values, but work out how much cover you need [LINK] to get an idea of whether the cover amount provided by work will be enough for you.
The cover ceases when you leave or lose your job
In today’s world, it’s becoming increasingly common for people to switch workplaces every few years. When you leave your job, your cover with your employers no longer exists – if your new job doesn’t offer similar perks you’ll be left without cover. The same goes for if you lose your job or are out of work for a few months for any reason, even if your employer goes bankrupt or something similar.
Another scenario to consider is if you’re forced to leave your job due to health reasons. If your health has declined severely, you’ll likely struggle to get another life policy so you will be left high and dry!
The bottom line is that if you rely solely on cover from your employers, you’re putting yourself at risk of ending up in limbo with no coverage. You also don’t want to end up in a position where you’re stuck at a job you want to leave just because they offer insurance which you don’t have in a personal capacity.
It may not be your cheapest option
Often, private policies can be cheaper than those provided by your work. This will depend on the insurer, your risk profile, and even your age but it’s not wise to assume that employer-provided cover is definitely cheaper than your own life insurance. Shop around to see what other providers can offer.
The solution?
Keep your work life policy but add on an individual one. Extra cover is always good to have, and the benefit is that you’ll often be covered even if you’ve had previous health issues which a life insurance company may balk at. However, make sure you have your own cover too. Your best bet is to lock in a good rate while you’re still young and healthy but the most important thing is to make sure that you have enough life cover in place.
