Why is employer insurance not enough?

  • Life Insurance Articles

Picture this. You’ve just got an offer letter for your first job. Or, if you’ve been working for a while, you’ve just got a job at your dream company. You’ll no doubt be excited about it, right? And when you check out the benefits and perks your new employer offers, it gets even better. Conveyance allowances. Weekends off. Flexible working hours. And even employer-sponsored insurance!

That’s a lot to celebrate, isn’t it?

Today, many top level employers give group insurance benefits to their employees as a part of their regular salary package. And sure, employer insurance is definitely an excellent advantage, But when you take a closer look at your corporate group insurance plan, ask yourself this question - Is employers insurance enough?

Depending only on the insurance offered at your workplace may not be the best option. There are many reasons why you may have to supplement your corporate group insurance plan with your own individual life insurance cover.

Check them out here.

Reason 1: Your employer may not offer you an adequate life insurance cover

What do you consider as an adequate life insurance cover? Some experts recommend having a cover that is at least six times your annual salary. Others recommend a cover as high as 12 times your annual income. Also, what may be an adequate life insurance cover for another person may not be sufficient for you.

Unfortunately, in a group insurance plan taken by your employer, individual requirements are not included. So, if you have dependent parents, a spouse and/or children who rely on your income for their needs, the plan offered by your employer may not provide you an adequate life insurance cover. It may be necessary to supplement your corporate group insurance plan with your individual insurance policy.

Not sure whether you have adequate cover? You can make use of Human life value calculator to get a better idea of this.

Reason 2: Your plan may not cover your spouse

Today, the insurance market in India has grown a great deal. We have plans that cover not just the policyholder, but also their spouse. These joint life covers are beneficial because in some cases, getting two separate policies may prove to be more expensive in the long run.

But insurance plans given by employers do not cover your spouse, in most cases. And even when they do, the plans may not offer an adequate life insurance cover for your spouse. So, if your current employer-sponsored insurance plan does not cover your spouse, you may need a supplemental insurance plan of your own.

Reason 3: You could lose the cover if you switch or quit jobs

Life insurance plans sponsored by your employer are linked to your job. So, if you switch jobs, or if you quit your position at the company, you will generally no longer enjoy the insurance benefits they offer. If you’re moving to a job that offers similar benefits, you may still continue to enjoy insurance sponsored by your new employer.

However, there’s no guarantee for that. People switching jobs may also have to deal with other issues like increased age and health issues. This is because they will be older when they switch jobs. This could affect their eligibility for an insurance cover at the new workplace. With so much uncertainty surrounding a corporate group insurance plan, it’s always a safer idea to get your own insurance policy to supplement what your employer offers.

Reason 4: Employer-provided insurance is not very customizable

When you purchase a life insurance policy as an individual, an adequate life insurance cover is not the only benefit you enjoy. You can also customize various aspects of your plan, such as the premium payment term, the premium payment frequency, any additional riders, and the age up to which you enjoy the coverage.

An employer insurance plan may not offer you all of these customizations. You will have to settle for a one-size-fits-all group policy. That may be a great addition to your insurance coverage, but it’s not a smart decision to rely only on what your employer offers. Insurance is not a one-size-fits-all product. It is best to have your own cover as well, customized to your needs.

Reason 5: There’s also the risk of non-renewals

Group life insurance plans taken by your employer are generally renewed on an annual basis. Most companies tend to renew the corporate group insurance plans on time. But sometimes, things may not work that way. This is particularly true during periods of recession, or if the company’s business is not profitable.

The management may decide to not renew the insurance plans taken for their employees. In that case, without your own individual insurance plan backing you, you may be unprotected from the financial impact of life’s uncertainties.

Last words

See why it’s always a good idea to look beyond just your employer insurance? Today, there are many different kinds of life insurance plans you can purchase. Irrespective of what your budget is and what is an adequate life insurance cover for you, there’s a life insurance plan that will meet your requirements. So, make sure you secure your future as well as the future of your loved ones sufficiently.

ADV/4/20-21/2728

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