|Question: What are the pros and cons of buying life insurance through my employer rather than buying my own policy?|
Many companies offer their workers employer-sponsored life insurance coverage as part of their employee benefits package. If you are offered this opportunity, it is probably in your best interest to accept. Buying life insurance through your employer can be a relatively inexpensive and hassle-free way to get some of the life insurance coverage you need.
With a group life insurance plan, your employer purchases a single policy that covers all employees. This policy is subject to a single group premium payment. Some employers may pay the entire cost of the group policy (which is tax deductible to the employer). But if the plan requires you to pay a portion of the group premium, that amount will probably be lower than what you would pay for an individual insurance policy. And you generally don't need to pass a medical exam when applying for group life insurance.
The major disadvantage of employer-sponsored life insurance is that it isn't portable. If you leave your job, your group life insurance coverage will end, unless you're allowed to convert your group coverage to an individual policy (which may cost significantly more). This could leave you underprotected if you're unable to qualify for a new policy at a reasonable cost because of your age or changes in your health. And if you're required to pay the group premium out of your own pocket, you could decide not to participate in the group plan if you find a less expensive rate with an individual policy.
Another disadvantage to group life insurance is that the policy may not be tailored to your individual needs. For example, the amount of coverage may be less than what you require to be fully protected. If so, the group policy may give you the option of purchasing more coverage for an additional cost and for which you may be asked to answer medical questions. But even if you end up buying supplemental insurance through a separate company, your employer-sponsored plan gives you a head start in meeting your life insurance needs.