Why You Need Supplemental Life Insurance?

Safeguarding your family’s well being is one of the top most responsibilities of any individual.

Well, as the head of your family, you can ensure the safety and well-being of your family by providing them with adequate financial stability.

As a matter of fact, financial stability can be ensured when you have garnered enough savings so as to protect the financial interests and aspirations of your family.

One of the tried and tested methods of covering the financial risks in the event of your death is to have life insurance cover in your name. By having life insurance, you ensure that your family’s financial interests are secured and protected even when you are not there with your family.

Although having a life insurance cover in itself is very critical decision, but it is not the only thing that you need to do to ensure financial stability and protection of your family.

The other thing you need to consider is the adequacy of the life insurance cover opted by you.

Why You Need Supplemental Life Insurance?

In this context, the most important question you need to answer is whether your life insurance cover enough so that you can adequately protect the financial risks of your family.

So, you need to look and find out whether your life insurance cover is enough or whether you need to supplement it by increasing your life insurance cover.

For the ones who are running their own business have the sole option of taking out a life insurance cover in the form of an individual life insurance policy, but those who are employed and working for a traditional employer get another option in the form of employer life insurance.

Actually, employer life insurance is nothing but the employer sponsored life insurance coverage which is offered by a company to its workers and forms a part of the overall employee benefits package.

Well, there are certain distinct benefits of employer sponsored life insurance coverage. So, it is always in your favor to accept the offer of employer life insurance.

Firstly, employer life insurance is relatively much cheaper than an individual life insurance policy.

Usually employers pay all the cost associated with an employer life insurance; however, in some cases an employee is required to pay a portion of the premium towards the employer life insurance policy.

In either case, the cost to the employee for this employer life insurance is much lower than an individual life insurance policy.
Secondly, having a group insurance scheme like employer life insurance is hassle free as you don’t have to clear medical examination to avail the benefits of this insurance plan.

However, like all good things have their limitations, employer sponsored life insurance plan have their own set of limitations. From the point of view of an employee or the life assured these limitations are very crucial and need to be taken into consideration. First and foremost, employer life insurance does not adequately cover up your financial risks and falls wells short of your life insurance needs. Usually, employer funded insurance plans provide coverage up to $100,000. Some employers also base the coverage on your gross yearly earnings.

In either of the case, the coverage is just not sufficient to cover the expenses of your family in the event when you are no longer there with your family. So, just having an employer life insurance will not meet your goal of adequately protecting your family’s financial interests and expenses in case you are not alive.

Then the second most obvious limitation of employer sponsored life insurance plan is the fact that it is not portable. So, if you happen to leave your job, the employer life insurance will cease to exist. In most of the cases, there is no such provision of converting an employer life insurance into an individual policy.

This means you stay uninsured until and unless to get a new job and a fresh employer life insurance. Moreover, in case your employer life insurance is converted to an individual policy, the cost will increase substantially. Then with the new employer, you may be required to pay a substantial portion of the group premium out of your own pocket, and chances are very much high that you may decide not to participate in such type of group insurance plan when you have the option of purchasing a relatively less expensive individual policy.

Another major drawback of employer life insurance is the fact that it may not be tailored according to your individual requirements. So it may happen that the amount of coverage is less than what you require to stay fully protected. Then another important fact linked with employer life insurance is that most employers provide insurance cover to their employees in the form of term insurance.

So, it might seem sufficient for some employees, actually lack other insurance benefits required to fulfill your financial objectives. Term insurance plan does not accumulate cash value, so you do not get the opportunity to do supplementary savings for your retirement. You even do not get the facility of taking out loans against your policy.

So you see that simply depending on employer life insurance for meeting your financial risks will not be an intelligent decision at all. To get adequate insurance coverage and fulfill your financial requirements you should go for taking an individual insurance policy. Thus, you should supplement your employer life insurance with a separate life insurance policy. By having an individual life insurance policy, you offer yourself several advantages.

You can have an individual life insurance policy which adequately meets your specific insurance goals and objectives. You can choose the coverage amount, the duration of the plan, and opt for an insurance policy which lies within your budget. You can have multiple quotes from insurance companies so as to get the best premiums for yourself. So against having a term insurance plan from your employer, you can choose a favorably tailored insurance plan which includes other benefits too.

Ultimately, it is for your own benefit to supplement your employer life insurance plan with an adequate individual life insurance policy. When you supplement your employer life insurance plan with individual life insurance policy, you make sure that you fulfill your financial objectives and fully meet the expenses and aspirations of your family in the unfortunate event of your death.

Share on:


TradingView is the top stock charting software available for FREE.

Get Now


Top Stock Broker in India. Open Free Demat and Trading Account.

Get Now
Scroll to Top