One of the benefits of being an employee is group life insurance. From what I know, the total benefit is equivalent to twice of one's annual salary, at least for the companies I've worked for. Although, limits vary from one company to another. In my previous jobs, we had the opportunity to sit down with the insurance company and discuss the policy features and benefits. Thus, all queries about policy termination, beneficiaries and exclusions were all clarified.
Now, my question is do we have to get another life insurance policy other than the group life insurance the company purchased on our behalf?
My stand on this issue is very much dependent on the coverage provided by the company. As what I've said earlier, limits vary and is the company's discretion. If the policy limit is twice my annual salary, I would still buy another policy to complement it. One has to consider a lot of factors to determine how much limit is appropriate. This include status (married or single), number of dependents, financial obligations i.e. mortgages, loans, lifestyle i.e. active or couch potato and current health conditions.
An ideal life insurance policy for me should at least be 10 times my annual salary. The limit is enough to send my kids to college and live a comfortable life in case something happens to me. However, an insurance policy 10 times my annual salary is very expensive. So what I did was to purchase a reasonable limit based on what I can afford now. It's easy to increase policy coverage, anyway.
As a breadwinner, it is important to have coverage. I know that a lot of us cringe at the thought of death but hey, death is inevitable. Plus, I don't want to burden my kids or my family in general, with money problems when I'm gone. I see insurance as an investment. Not for my benefit but my family's well-being.
Monday, December 29, 2008
Your life policy: How much coverage is enough?
Labels: Life Insurance
Posted by Mari at 12/29/2008
2 comments:
One can also increase one's insurance coverage through a term life insurance policy. Although unlike a typical whole life policy that remains in effect permanently (assuming premiums are paid on time), a term life policy is only in effect for a certain period of time. However, a big advantage that term life insurance policies have over whole life policies is that their premiums generally cost much lower.
Panaderos - I forgot to talk about term vs whole life. Thanks for pointing that out. I used to have a whole life policy but I discontinued it and purchased a term life instead. It's cheaper in terms of premium. But the limit is a lot higher than my whole life.
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