Many people rely on life insurance provided through their employer, but that may not always be the best bet. Here are four situations where you may consider an individual life insurance policy, even if you’re covered through your employer.
You Plan to Switch Jobs
Workers can’t always convert groups life insurance to an individual policy. That means you may lose coverage when you leave a job. According to an article written by NerdWallet and published by the Associated Press, this is especially an important factor for younger workers. They typically do not stay at jobs as long as older workers. The Bureau of Labor Statistics found that median job tenure was 2.8 years for workers 25 to 34 years old. That’s compared to 9.9 years for workers 55 to 64.
Other plans do allow you to convert group coverage into an individual plan. You would no longer have subsidized premiums through your employer. And you would typically have 30 days after leaving your job to contact your insurance provider about converting your coverage.
You Are a Long-Term Freelancer
Long-term freelancers do not have an employer to provide group life insurance. In some cases, a spouse or eligible family member’s group life insurance policy may cover you. But for many freelancers, individual life insurance is the only option. If you are a freelancer with variable income, it may be hard to calculate how much insurance you need. But a qualified insurance agent can help.
You Need More Coverage
Basic group life insurance is typically free or low-cost to employees. But the policies often only cover up to one or two times an employee’s annual salary. Some workers may want additional coverage in order to provide more of a financial safety net.
Individual Life Insurance Fits Into Your Retirement Plan
Permanent life insurance is an umbrella term for life insurance policies that do not expire. That is, as long as you pay your premiums. That’s in contrast to term life insurance, which has an expiration date. Permanent life insurance typically combines a death benefit with a savings element. It may be possible to convert term life insurance into a permanent life insurance policy.
For some, it may make sense to take cash value out of your policy during retirement or borrow against it. In the first case, permanently taking out cash value will typically reduce the value of your death benefit. In the second case, borrowing typically reduces the death benefit until you pay back the loan. The choices depend on what your other financial vehicles are and how the market is doing at the time of your retirement.
Farris Insurance Can Help With Individual Life Insurance
There are a lot of different considerations when it comes to choosing individual life insurance. Here at Farris Insurance, we can help you find the right insurance. Talk to us about your coverage and your deductibles.
Farris Insurance serves businesses and people across Northwest Arkansas, including Springdale, Fayetteville, Bentonville, Rogers, and throughout Benton County and Washington County. Contact us today at (479) 756 – 6330.
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