Commentary by Joel Harris
Many Americans have access to term life insurance through their employer. This benefit can be a great way to protect your family in the event of an untimely death.
If you purchase term insurance through your employer, I highly recommend you examine the plan to learn the specifics. For example, will your coverage end in the event you resign or you’re terminated from your position? Are your premiums higher in your company plan than if you went out in the market to get term insurance on your own? In many company plans the premiums tend to escalate every five years. Furthermore, you tend to get lumped into a standard rate-class as you age with your co-workers, so your premiums can be higher than they should be.
If you’re healthy, it behooves you look into term insurance outside of your employer’s plan.
Let me share a specific example of a how a man (I’ll call him Roger) saved money on his life insurance by getting it on his own.
Roger is healthy male who purchased a $650,000 term insurance policy through his employer. He celebrated his 60th birthday three months ago. Roger needs the term insurance to provide his wife with enough money to pay off the house and supplement his lost income.
His premium for $650,000 worth of coverage was $200 per month at age 59. Because Roger recently turned 60, he got bumped into a new higher age bracket that caused his premiums to double to $406 per month. At 65, his premiums will jump to $822 per month. These increases in premium will be very difficult on Roger’s budget.
Roger decided to run some comparable quotes to lock in a 15-year term policy with a
$650,000 death benefit. He submitted an application with a leading provider, completed the underwriting process and was approved at a non-smoker rating. By doing this, Roger locked in a $217 per month premium payment for $650,000 worth of coverage and dropped his coverage with his employer.
Most importantly, this policy is portable and continues after Roger decides to retire at 67. It will save him a significant amount money over the next 15 years. If you have a plan at work, please take the time to review it closely to make sure you’re not overpaying for this valuable coverage for you and your family.
Please note this is only an example and does not represent your specific situation. Please contact a trusted advisor for more information about your particular needs.