Sunday, November 16, 2008

Group Life Insurance – Not Enough

It is a good idea to have your own policy outside of employment, even if you have access to group insurance. In my case, my employee pays 3x my annual salary. Nevertheless, an individual policy is an important part of any financial plan.

  1. Group rates are not "underwritten" and thus rates reflect the good and bad risks within the underwritten pool. When you are young and healthy, you are overpaying for insurance.
  2. If you lose your employment, they are required to offer you a "conversion", but it doesn't have to be a good one. When I left my last employer, the conversion was a whole life policy at something like $500 per month.
  3. You can shop around for the best rate that fits you needs.

IMHO – term insurance is almost always better than whole life.

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