Athens Eco Latino

	Noviembre / November 2005 Vol. 3 Número / Issue 8

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Employer-provided group life insurance not the best coverage

Many believe that all life insurance is the same: it pays a benefit to your beneficiary in the event of your death. And, while all life insurance is the same in that respect, there are some key differences between the types of life insurance available. The most common form of life insurance held by American workers is employer-provided group term life insurance. This type of life insurance offers smaller amounts of coverage generally ranging from $10,000-$50,000, and the premiums for these lesser amounts are usually paid by your employer.

Often, this benefit is accompanied by an option to purchase additional amounts of coverage at seemingly attractive rates. You may have to answer a few questions regarding your health history and any existing medical conditions, but that sure beats having to submit to a physical exam, right? Well, the next time your company has an open enrollment period, you might reconsider the type of coverage you rely upon to protect your family. You see, there are some key differences between group life insurance that you obtain through work and individually-owned life insurance that you purchase through a life insurance agent or broker.

Firstly, group life insurance rates are almost always "age-banded", meaning they increase with age, typically every 5 years. For a 25 year-old, the rates may be quite low; however, for 40 and 50 year-old employees the rates can be quite high. In addition, group life insurance is almost always non-portable, which simply means that if you leave your job, you'll most likely have to leave your life insurance as well. This can mean bad news for someone with an existing health concern that might make obtaining new coverage expensive or even impossible. Some group coverage is portable and convertible to permanent coverage, but usually at much higher rates.

As a general rule, you should own individual life insurance and allow group insurance to supplement that plan. While it is true that you almost always are required to have a physical exam, the benefits far outweigh the inconvenience. By agreeing to this simple step, you are often able to guarantee your premium for 10-30 years with term life insurance or for life with a permanent policy. Also, your coverage remains in force regardless of your employment status, and, as long as you pay your premiums, the life insurance coverage is there to protect your family.

The next time you review your life insurance plan, check with an independent advisor/planner to assist you in determining the proper amount and type of coverage you should own. As a result, you can compare your individual options versus simply relying upon your employer's group or supplemental life plans.

Jeff Johnson is an Individual and Group Insurance Consultant at Holland Financial Services, Inc. For more information, call 706-369-8888.