By Jamie Cooper of Northwestern Mutual
If you had life insurance through your employer, you may now need to find new coverage. The number one reason to own life insurance outside of your employer is because a policy with an Independent Agent is portable. Meaning it cannot be cancelled or lost in times of job or health changes. Having insurance outside of your employer allows you to work with someone who can provide a holistic financial planning approach. This is the chance to work with an advisor on all aspects of your financial future, not just insurance planning. They take into consideration your short term, midterm and long term goals and help you plan for the future if you were to live, die or become sick or injured and unable to work.
Next, you have options – we design a plan that best fits your individual needs and is not a guaranteed issued policy for the masses. We determine “how much death benefit should I own?” – Employer life insurance is typically a small fraction of what you should have. We take our clients through a detailed analysis that helps determine how much insurance they should carry to cover all of their family’s needs.
Employer coverage generally does not allow for Spousal/Legacy planning; the ability to place insurance that is everlasting on your dependents. This could be a huge missing piece, spousal insurance. Think of all the little things he/she does for the family and how do you replace that. Not to mention placing life insurance on your children as a way to kick start their savings plan for college, their first car, wedding, etc. The uses for cash values within a life insurance policy are endless and can be tax free.
Cost is another big factor – if you are younger and healthier, buying coverage through an independent agent vs your employer, may actually be less expensive. There is a misconception that employer owned life insurance is less expensive, which it can be, but it is more often 2-3 times more expensive.
Remember employer insurance is underwritten on a pool of people. So the younger, healthier employee, has the same rates as the older, less healthy employee.
Lastly, working with an insurance agent gives you a reliable source to call on – Human Resources with your employer can be great but do they understand the in’s and out’s of life insurance? Do they know or understand your families need for it? Most times they do not and are unsure who to even send you to when you have questions. Having insurance with an independent agent gives you someone that you can call on and that your beneficiary can call on in times of need. Your insurance agent will help advise you on more than just life insurance and helps to paint a picture of your entire financial plan.
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