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Posted on July 27, 2018
by caprice

Is Your Employer’s Group Life Insurance Enough?

Many employees are entitled to a company paid life insurance benefit of some sort.  Whether it’s a flat amount or a multiple of your annual salary, company paid life insurance is a great fringe benefit. Sometimes you also have the option of purchasing additional life insurance for you, your spouse and children at an additional cost and have the cost of the life insurance deducted from your paycheck. For those who have these benefits available through their employer it is a great benefit but is it enough?  In the next few paragraphs we’ll explore that question in a little more detail.

American Broadway actor Will Rogers once said “A man who dies without adequate life insurance should have to come back and see the mess he created”.  Right or wrong I agree that it’s important to have some kind of life insurance in place and that the “mess” left behind by not having adequate life insurance most likely looks different for all of us.  If you are the breadwinner for your home, have a spouse and a house full of children depending on your income then your life insurance needs are significantly different than an empty nester whose children are grown and is focused on socking money away for retirement. But how much is enough? Financial guru and national radio personality Dave Ramsey suggests 10 to 12 times your annual income for term life insurance.  10 to 12 times income may be a fit for the family breadwinner who is married with children but may be overkill for the empty nester.  The answer is really up to you and those that you need to provide for in the event of your early demise.  Here’s an acronym that may help start that conversation:

L: Liabilities

I: Income

F: Final Expenses

E: Education

Think about these four categories and see how your thoughts and goals in each category align with those of your spouse or those you are responsible for and go from there. What kind of debt do you have that needs to be taken care of if you pass away (liabilities)? For how many years do you want to provide your current income to your family if something should happen to you (income)?  Do you have money put away funeral costs (final expenses)?  Perhaps you have enough money saved to self-fund your final expenses.  Some families invest in a 529 plan to fund their children’s college educations (education).  For some families that may not be a top priority. Again, there’s no right or wrong answer.  The answer is different for each family.  The important thing is to have the conversation and then act on it.  Purchasing term life insurance has never been more affordable and convenient.

If you have more questions on your life insurance benefits offered through your employer or are interested in purchasing additional life insurance please don’t hesitate to contact me. Next time we’ll discuss whether or not you should have life insurance separate and in addition from that which is provided by your employer.

Matt Brooks

301.698.5425

matt@insurancebmc.com

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