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Why Your Life Insurance Issued by Your Job May Not Be Enough

Employers usually offer job benefits to their employees which not only entice individuals to work for them but act as a way to retain the employees as well. Benefits such as health insurance, life insurance and vacation days are highly favored items which employees come to know and expect. There is a caution however with regard to relying too much on the life insurance provided by one’s employer. There are a few reasons why your life insurance issued by your job may not be enough.

Minimal Coverage Amounts

The amount of coverage provided by an employer-sponsored life insurance policy will vary from company to company. In general, life insurance policies of this type will often be a minimal coverage amount for the employee. The reasons for this are due to the large number of employees needing such coverage and the desire of the employer to keep premium costs at a minimum. Unlike regular life insurance coverage, many employees who receive life insurance via their employment will find that the payout will be less than what it would be if they had purchased their own life insurance policy.

Not Tailored to Suit Individual Needs

Another reason why the life insurance policy issued by their employment may not be enough is because they are not specifically suited to a certain individual but a large group of individuals. Therefore, the recipient of such a policy is not able to select a policy which works best for them since it is a large-scale insurance policy as opposed to a single policy for a single individual.

Life Insurance Benefits May Cease

An additional issue which individuals may face when they have life insurance through their current employment is that the policy may cease to exist at some point in the future. This may be due to termination by the employer or the employee leaving the company. The end of the life insurance policy may be detrimental for the individual who does not have a backup policy or is not able to obtain a new life insurance policy right away.


In most cases, it takes about 30 days after a person dies to receive the insurance money. Life insurance offered by private companies usually pay out much sooner than 30 days.


These are just some reasons why one’s life insurance issued by their job may not be enough for the individual. In order to prevent these issues from arising, individuals may consider reviewing other possible alternatives as opposed to solely relying on their employment issued life insurance policy. Doing so will help the individual to determine if their bases are covered with regard to an adequate life insurance policy which will protect them down the road.

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