If you are employed, there are chances that your employer will offer a life insurance product to take care of your needs. You should be aware of the terms and conditions of the insurance plan. There are certain advantages and disadvantages with the life insurance plan offered by the employer. The plus points are that you will not want to undergo a medical checkup and various pre-health conditions are covered by the policy. The group premium will be low. The negatives are that the coverage may be insufficient. It might not protect the interests of your family members. Hence, you are advised to reassess the insurance policy and should the second policy as well to fulfill your needs.
Reasons for Another Policy
The employer will offer an life insurance policy at a very low cost. It is possible to obtain additional coverage by paying the extra premium. The coverage should be 5 to 6 times the annual salary to offer financial protection to your spouse and children. If the group policy fails to offer sufficient coverage, you are prone to go for an additional insurance plan.
Loss of Coverage
As you leave the organization or company, your insurance will cease. If you change your job, you should get a new life insurance policy. You should take steps to get continuous coverage with a life insurance plan. Hence, it is important to buy a policy other than the policy offered by the employer.
Decreasing Coverage with the Deterioration of Health
You should be aware of various clauses of the life insurance policy offered by the insurance company. If you are unable to work for the company due to health issues, you will want to quit the job. You will fail to get the insurance when the family needs the most. There will be limited employment options if you are insured from a single life insurance policy offered by the company.
No Coverage for the Spouse
In most of the cases, the policy offered by the employer will offer health insurance for the spouse. However, it fails to offer the life protection for the spouse. There will bean economic hardship due to the death of the spouse as well. If your wife dies, you will not be able to attend the job immediately. If the children are young, you will want to find a caretaker and there will be a change in roles and responsibilities. Hence, a life insurance product should offer coverage for the spouse as well.
Coverage Ends with Retirement or Age
When you subscribe to a life insurance plan offered by the employer, the coverage will end with the retirement or age. Hence, you are going to lose the insurance protection when you need it the most.
Change or Termination of Coverage
It is possible that the employer might terminate or change the coverage of the policy. As the contract is between the employer and the insurer, your interests are not protected. Hence, you are advised to choose a second policy which will cover your life always.
The life insurance policy offered by the employer comes with limited options. It is not possible to customize the policy as per your needs. when you subscribe a life insurance policy directly from an insurance company, the customization of the policy can be done as per your needs. You are in complete control of the premium, rider selection and the sum assured. There are policies which will continue throughout your life.
Benefits of a Life insurance Policy
- Entry age – The minimum age is 18 years and the maximum age is 75 years.
- Policy term – 15 years to 40 years
- Sum assured – Varies as per the premium (from Rs. 1 lakh to Rs. 1 Crore and above)
- Types of plans – Term policies, endowment policies, ULIP (Unit Linked Insurance Plans), money back life insurance, whole life insurance
- Maturity benefits –No maturity benefits are paid on survival with the term policy. Maturity benefits are paid after reaching certain age.
- Death benefits – When the policy is active, the death benefits will be paid to the nominee.
- Additional benefits – The term insurance offers maximum protection with minimum premium payment. If you are looking for a pure insurance plan, you should go for term insurance plan.
It is quite reasonable to get an insurance policy from an employer. However, it may not fulfill all your needs. In most the cases, the employer will offer an insurance policy as an obligation. Hence, you should go through the terms & conditions and coverage and should opt for an additional plan to fulfill your needs. The best life insurance policy will offer cover to the family and financial distress can be avoided in the best possible way. You should compare various policies offered by different insurance companies before buying the life insurance plan.