New to The Health Insurance Store – Ask the Life Insurance Expert!
With our entry in to the world of life insurance, we’re happy to introduce you to our in-house expert, Tony DiRoma! In addition to Aaron’s “Ask the Medical Specialist” series, we will be running our new column, “Ask the Life Insurance Expert”. Be sure to write in any and all of your questions so we can make sure to not only get your best health insurance plan, but your best life insurance coverage too!
This week’s question
I read your column last week and you talked about some “who” and “why” reasons people purchase life insurance. I have a life insurance policy from my employer and I wonder what you think about those types of policies?
Answer
I think if you were offered life insurance from your employer than you have done the right thing by enrolling in it. Likewise, your employer is smart for offering it, because group life insurance can be an important part of any employee benefits package. A company that offers free or low-cost life insurance may have a hiring advantage over a competitor without a group plan.
As with everything in the insurance industry, it seems like we need to take a look at the “pros” vs. “cons” of this type of employer group coverage.
Pros of Employer Life Insurance
As previously mentioned, the fact that this type of coverage is usually free or low-cost is clearly in the “pro” column. also, it is very easy to enroll in this type of policy and the plans will cover anyone who wishes to participate. Coverage can often be extended to a spouse, child, or even grandchildren.
Even an employee with a serious health issue will usually find it easy to get this type of coverage. Everyone at the company will automatically qualify. the insurance company does not mind accepting an occasional higher risk person as they will ultimately enroll primarily health workers. Easy, inexpensive, and guaranteed… what is not to like there, right?
The Cons
Let’s take a look at some of the limitations or “cons” of this type of coverage.
One consideration is, can you purchase a large enough policy to meet the needs of your family? I mentioned last week that many recommend a life insurance policy that is 10 times your annual salary or even more. Individual needs will vary. Ultimately, the goal would be to cover any large debts and leave enough for your surviving spouse to take care of future expenses such as college. It is unlikely that you will be able to purchase that amount of coverage through your employer’s group plan.
Also, remember the “pro” of everyone qualifying for the coverage? Well, if you are young and health, that might mean you are slightly overpaying for your coverage (assuming your employer does not pay the entire cost) because surely if you have unhealthy coworkers that are unable to qualify for life insurance on their own, they most likely will be signing up. Insurance companies will take that into consideration. while they will waive underwriting and approve everyone, they will also be charging a higher premium. That is something to consider for someone young and health who is responsible for all or some of the premium.
The inability to keep the coverage if you change employers may be a drawback as well. Most often the life insurance provided by your company covers you while you are an employee of the company, but the coverage is likely to end when/if you leave for any reason. If you get another job, there is no guarantee that your new company will offer a group plan. This puts you in a position where you are older and potentially with health complications and it will be more expensive or impossible to replace that coverage on your own. Some employer-provided life insurance policies will have a conversion option if you leave the company. Make sure you know if that is an option and if a medical exam will be required.
What do we offer?
I should mention that The Health Insurance Store is contracted with a life insurance company that offers voluntary worksite life insurance for groups of 15 or more employees. If you are a small employer that would life to offer this as a benefit, please contact me.
These policies are typically paid for by the employee through a payroll deduction, but they are indeed portable. That means even if the employee leaves the company, they may continue the coverage at the same price by changing from payroll deduction to self-pay. This same company also offers a unique type of term policy called return of premium.
Last week, I mentioned a “negative” of term insurance ist he fact that more often than not they never pay a benefit. Most policies will expire while the insured is still alive and the beneficiary never receives a penny. Return of premium policies have the option of returning the premiums paid at the end of the term if you are still living and they also offer an option of converting to a fully paid-up policy through age 99 with a reduced face value. For example, a 26 year old takes a $50,000 term policy with a return of premium feature for 20 years. They pay $20.48 bi-weekly pay through payroll deduction. If they are alive at the end of the term, they are able to get $8,500 back in returned premiums, or they can convert it to a $35,050 policy without any further payments. That policy will now cover them up until age 99.
Thank you!
If you have questions regarding life insurance or would like to make an appointment to discuss options or review your current policy, give us a call or email me directly at tony@getyourbestplan.com
Erie County Area
1105 West 12th Street, Suite – A
Erie, PA 16501
Phone: 814-920-5275
Fax: 814-920-5276
Fayette/Westmoreland County Area
121 North Pittsburgh Street
Connellsville, PA. 15425
Phone: 724-603-3403
Fax: 724-603-3402
Pittsburgh Area
21 Yost Blvd., Forest Hills, PA 15221
Mailing Address: 128 Forest Hills Plaza, Pittsburgh, PA 15221
Phone: 412-349-8818
Fax: 878-302-3149
Albuquerque/Santa Fe, New Mexico Area
821 Coors Blvd. NW
Albuquerque, NM 87121
Phone: 505-200-0069
Fax: 505-200-0073
Serving These Areas
We proudly serve the health insurance and Medicare needs of the following Pennsylvania areas: Connellsville, Uniontown, Greensburg, Mt. Pleasant, Scottdale, Irwin, N. Huntingdon, Murrysville, Monroeville, Plum, Lower Burrell, New Kensington, Pittsburgh, Plum, Oakmont, Penn Hills, Forest Hills, Wilkinsburg, East Liberty, Lawrenceville, Bloomfield, Natrona Heights, Leechburg, Washington, Morgantown WV, Latrobe, Monnessen, Jeanette, Erie, Edinboro, Northeast, Girard, Fairview, Union City, Harborcreek, Corey, Meadville, Waterford, Ligonier, Kittaning, Somerset, Waynesburg, Fayette County, Westmoreland County, Armstrong County, Butler County, Somerset County, Erie County, Crawford County, Venango County, Allegheny Valley, Pennsylvania
We proudly serve the following New Mexico areas: Albuquerque, Rio Rancho, Sante Fe, Bernalillo, Belen, Los Lunas, Espanola, Moriarty, Corales, Tijeras, Cedar Crest, Edgewood, Soccoro, Sandoval County, Sante Fe County, Bernalillo County, Rio Arriba County, Valencia County, Soccoro County, New Mexico
Not affiliated with the U. S. government or federal Medicare program.
We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options.