Employer Life Benefits Aren’t Enough

Last week, Sears announced that they were cancelling life insurance coverage for their retirees.  If you haven’t read about it- here is the article:

Insert the “shake my head” emoticon here.  It is a shame that retirees that were counting on that benefit can’t really do much about it.

It was also interesting to read that the average life insurance policy at Sears ranged from $8,000-$10,000 and that some eligible retirees would be able to keep a $5,000 policy.

The low amount of life insurance available to Sears retirees didn’t really surprise me.  In my former life, I sold group life insurance to businesses under 100 employees.  Most of the companies took that benefit as a discount for their health insurance.  The vast majority of the group life insurance companies provided for their employees had a $25,000 benefit.  That’s it.  Oh sure, some more generous employers offered their employees 1-times or 2-times salary as a benefit, but those were not very frequent.

If you have group life insurance available through your employer, you should absolutely take it.  But you should never, ever count on that as your main source of life insurance protection.

Why not?

Think about this- does the thought of losing your job make you panic?  Does it give you anxiety to think about how you would pay your bills?  Does thinking of not having an income for weeks or months make you kind of depressed?

Now- instead of losing your job- imagine this- you drop dead TODAY.

Because people don’t usually plan ahead on the whole dropping dead thing.

What is your family going to do?  They will immediately need to plan a funeral.  They will  have to take some time off and will probably need some counseling.

And then… 30 days later… they will get hit with your medical bills.

If you live with someone who depended on your paycheck to pay the rent or mortgage… now that payment is due and your income isn’t there.  What are they going to do?

How are all the bills going to get paid without possibility of your income coming back?  If the average group life insurance benefit is only $25,000, then what are they going to do to replace the rest of your lost income?

You are either a person that cares about the people who will be left behind.  Or you are one those people who says “who cares… I’ll be dead.”

Don’t be one those people.  That isn’t cool.

Bottom line: you need more life insurance than what your company is providing for you.

Secondly, as Sears, Boston Store, ShopCo, Sports Authority, and other employers both large and small are demonstrating- you shouldn’t count on your benefits being around forever.  The next recession is coming and more companies will limit benefits or go out of business.

If the company you work for goes out of business- your life insurance benefits may go with them.  The older you get- the more expensive it is to obtain life insurance.  The more likely it is that you have developed health conditions that make life insurance more expensive or possibly- even impossible to get.

The answer to this problem is simple.  Absolutely take the group life insurance at work.  It is a great start.  But protect your family and your assets by purchasing life insurance on your own away from work that you have control of.  You control the amount of benefit, the amount of time, and what premium you feel comfortable paying.

P.S.  On May 1st from 6:30 – 7:30 pm at the Good Harvest Cafe in Pewaukee we will be hosting a FREE class titled “OMG!  I’m Dead”. We (Dennis, Christine and Ashley Leonhard-Lillesand from Lillesand Law will be talking about the things you can do before you “drop dead” to ease the chaos your family may feel.

Save your (free) chair by registering here: https://www.eventbrite.com/manage/events/58879656638/tickets

 

 

 

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