Should I Get Life Insurance Through My Employer?


First, congrats on the new job. I hope this is the dream job you've been waiting for. You're going through all that new hire paperwork, all your benefits, and you're trying to do the responsible thing, and say, "Does it make sense to buy life insurance?" Well, this might come as a surprise, but if you are super healthy, then I would encourage you to not buy life insurance through your job, but to buy life insurance through a third party, whether online somewhere or through a local independent agent.

Easy Isn't Always Better

You're probably wondering why buy through a third party when it's so simple to get life insurance through your job. You fill out a form, you send that in to your HR department, they automatically deduct the life insurance premiums from your paycheck. It's easy breezy, right?

But here's something to consider.

The average person changes jobs often in their career. If you're getting life insurance through your job now, what happens three years from now, seven years from now, or ten years from now when you change jobs? Now you have to run the risk of trying to get life insurance through your new job. That can get complicated because your new job might not offer the same type of group plan that your current job does.

Will Your Future Employers Offer Life Insurance?

What if, several employers down the line, you are hired by a firm that doesn't offer life insurance? Now you have to go to a third party, and that could cost more because now you're older. Maybe you've acquired a health condition. But had you gone to a third party in the beginning, you'd have that life insurance locked in for up to 30 years, and you don't have to worry about it anymore.

Cost and Coverage Are Comparable

Most people don't realize that buying life insurance through an independent agent or going online or buying it anywhere, for that matter, is going to cost you about the same as buying through a group plan like a job offers.

And as far as it being easier to purchase insurance through your job, getting life insurance coverage only requires a phone call and having a traveling nurse visit you at home or work for a quick blood and urine test. Within four to six weeks the insurance company will let you know whether you're approved or not. Once you're approved, you can have the premium automatically deducted out of your checking account, and then you have the life insurance coverage you need.

So while getting life insurance coverage through your employer is easy, it's not that much more difficult to get it through a third party. It's not going to cost you any more than what you're currently paying, and you can have the life insurance that you need for your family no matter where your career takes you.

Click here to get a free, no obligation life insurance quote through Wise Bread.

Jeff Rose is Wise Bread's resident Certified Financial Planner. His personal blog is Good Financial Cents.

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Guest's picture

Jeff is on point. If you're healthy, avoid the unnecessarily higher premiums from the group plan and seek out private insurance. Every penny counts! Especially if you're younger, you can not only have full control over your policy no matter where you go (let's face it, we younger folks change jobs a lot!) and you will take advantage of your youth and health.

Guest's picture

My employer provides 2 years salary life insurance for free! I'm 23 with no dependents. Does it make still make sense to lock in a 30 year rate now with a third party?

Guest's picture

Opt out of employer group life insurance plans!

Regarding life insurance at work, one thing most people don't consider - why is this insurance so cheap to get? Because for younger people, many deaths come from illness that takes months (or years) to result in death. Most people choose to leave work and spend time with family. So the number of payouts? Few.

Ask yourself the question. Given 6 mo to live, do you want to have to stay at work in order for your family to receive these benefits? Most of the time, the answer is no