Company Life Insurance

One of the most essential parts of financial planning is buying the right types of insurance policies. Some companies provide employees with life insurance as a benefit. Usually, it is Term Life insurance and it is based on a multiple of your annual salary. For example, it could be as much as five times your annual salary. Theoretically, this would allow your family to survive for 5 years without you… giving them time to get prepared financially.

So, if you have a spouse or children to worry about, life insurance is a must. But there are disadvantages to employer-provided life insurance. Why would you choose to pay for something you can get for free?

What’s the Difference Between Term and Whole Life Insurance?

The biggest difference between term and whole life insurance is what you get for the premiums you pay. With term life insurance, you or your employer, is paying specifically for a death benefit and nothing more. The insurance company gets a certain amount of money for premiums, and then they give your loved ones a death benefit if you die while the policy is in effect. This usually means while you are employed there. So if you become disabled and can’t work you could end up losing your life insurance just when you need it most. At that point, you may not be eligible for coverage from a new policy.

With a whole life insurance policy, that you own, you get permanent life insurance coverage. This type of policy is going to pay out a death benefit as long as you keep paying your premiums. With a whole life insurance policy, you will be able to provide your family with some kind of financial benefits when you die as long as you keep paying the premiums, even if you aren’t employed. [Read more…] about Life Insurance Benefits