Supplementing Employee Policies with Individual Coverage

Employer-provided life, disability, or critical illness insurance is excellent, since it’s available as part of an employee benefits package and you may be eligible so long as you are a qualifying full-time employee. However, the amount of coverage and its options are generally very limited for each employee, since amount of coverage may be gauged based on a multiple of your salary or linked to your position. It may also only apply to yourself, and not to your spouse or children.

For some people, employer-provided insurance just isn’t enough. It’s best to seek out additional options to ensure that your coverage is enough for yourself, your dependents, and your financial goals. Here are some of the main reasons why you may consider supplementing your employee-provided health and life policies with additional individual insurance.

The benefits of employee-provided life, disability, and critical illness insurance

This whole article isn’t to say why we think that employer-provided benefits suck. There are so many benefits to having employer-provided plans. It’s, for one, extremely convenient. If employee life, disability, or critical illness insurance is made available to you simply by working at your company, beginning coverage is as easy as opting in.

Two, employers typically pay for most, if not all of company insurance premiums. The money you would otherwise have spent on a policy can be saved or used for other purposes, like paying off a mortgage, your child’s education, and so forth.

You can also get very early protection with your employer-provided plans. If you just started out at a company and are early in your career, you may not be in a place financially where you can afford purchasing life, disability, or critical illness insurance. This offers security early on.

Finally, most employee life insurance plans are written as “guaranteed” – which means that you can have coverage irrespective of any serious medical conditions or chronic ailments.

Reasons why you may want to purchase supplemental/an individual life, disability, or critical illness policy

Yes, employer-provided health plans are generally low-cost or even free altogether, but what if they’re not enough altogether? What if you and your family have very specific needs that can only be met by a separate, comprehensive plan which you can use to ensure your long-term financial security?

While employer-provided plans are great, they can be limited, and often won’t cater to very individual situations or needs. They’re good for the “Average Joe,” but being “unique” in this scenario can cost you unless you have additional life insurance.

For one, the standard employer-provided plan – let’s look at life insurance for example – will offer only about $50,000 to around $100,000 worth of coverage, or around a year’s salary.

Having dependents who rely on your income may mean that you will need additional income which goes beyond this amount to help provide for their needs if you should pass away prematurely. The majority of insurance providers will recommend obtaining coverage that is worth at least 5-10x your salary.

In fact, as it stands, most people can purchase an additional 4-6x their salary in supplemental coverage beyond what is provided by their employer. This is extremely helpful for employees with non-working spouses, larger-than-average families, considerable mortgages, or who have special-needs dependents who may require coverage beyond reaching adulthood.

Here are some other big reasons why someone might consider separate, individual coverage:

Losing your job

Losing your job and/or having to switch jobs may mean losing that coverage. See, that insurance is tied to that occupation – and losing or switching your job means losing that insurance. You’ll want to avoid gaps in your insurance not only to avoid a scenario where you could be exposed without that coverage, but also to maintain a continuous insurance history.

Some group policies will, however, allow you to convert into a standalone/individual option, but remember that this will cost you more as it will no longer be subsidized by your employer.

No coverage for your spouse

Unfortunately, the majority of employer-provided life, critical, and disability insurance plans do not offer coverage for your spouse and, if they do, the coverage they offer is often limited. Families may be subject to serious hardship in the event of either spouse dying – not just the primary breadwinner. If your spouse was non-working but was a stay-at-home parent or performed caregiver tasks, it can be a huge detriment to the entire family to have lost them. Individual plans can offer coverage for caregivers and the service they provided to your family.

Getting coverage before medical issues arise

Having individual coverage in place is a great idea as you never know what might happen in the future. If you were to lose your job and already have encountered a serious medical condition, acquiring individual/standalone insurance can be very difficult to do. If you rely heavily upon the employer-provided insurance that you have and then wind up with a medical condition or disability where you are forced to leave your job, you end up losing the coverage you have when you need it most.

Employer-provided insurance may not be cheapest

This situation is extremely seldom, but consider this: even if you feel your coverage is fine, consider shopping around with various insurers to see if what your employer’s plan offers is really the best option for yourself and the value.

If you are currently young and healthy, you’ll find it easier to get a better rate in other locations. Coverage offered by employers can get more expensive the older you get.

Supplementing your employer-provided policies can give you peace-of-mind

While purchasing an additional policy may sound like a pain in the neck to anyone involved, supplementing your employer-provided or group health/life plans can give you the peace-of-mind you most deserve. In general, you should always purchase the most insurance possible for your needs that you are able to afford at the youngest age. Remember that premiums may rise with age and there is always the potential to lose any job that you may have.

Consult with an Excalibur Defender to talk today about acquiring supplemental life, disability, or critical illness insurance.