The purposes of Life Insurance through your job is for an employer to be able to offer its employee’s life insurance coverage. Some people get it mixed up thinking it will last for their entire life, but it does not. This policy will only last you as long as you work for the organization that you work for and the cost of it will go up over the time you are there. Most Life Insurance policies through your job stay the same from age 18-40, and once you reach the age 40, it goes up every five years. However, when you get to age 65-75, it gets astronomical to the point where you’re forced to drop it. In most cases like for the Federal Government for example after the age of 65 not all the coverage goes away just 75% goes away. This is not a problem if you are working the job or you die while you are working it ends up being a good thing, the issue arises when you think this is all the coverage you have, and it will last for the rest of your life. On average more than 95% of people die in retirement and not during their working years. So, while Life Insurance through your job is cool, it’s always good to get other insurance coverage outside of it.
Life Insurance Policies are not paid for with before-tax dollars. The reason for this is when your beneficiaries can get the check for your Life Insurance that money is already taxed and they don’t have to pay taxes on that money. So, if you have a $100,000 Life Death Benefit and you pass and your heirs are given that check there are no taxes due. However, if you were to pay for the premiums with pre-tax dollars, taxes would have to be paid, so Life Insurance companies don’t bother with that, they only do post-tax dollars. .
You can make anyone your beneficiary for your Insurance through your job. You can have as many beneficiaries as you want, you just have to make sure that it all adds up to 100 percent.
The reason Life Insurance through your job can be expensive if you’re healthy is because Life Insurance through your job is a policy where anybody that works for the company or organization can get the coverage without any medical questions being asked. You can currently have cancer, diabetes, vastly overweight, multiple heart surgeries or even diagnosed with HIV. Anything that is looked at by most carriers as a red flag and will cause a decline but Life Insurance through your employer it’s okay. So, if you suffer from any of these ailments mentioned then your Life Insurance through your job is perfect for you because you wouldn’t be able to get coverage elsewhere. However, if you are a person that runs a marathon, works out everyday, eating well and have no health issues you will be paying the same premium as someone that does suffer from one of those ailments. You then have to ask yourself if that is the case how much are you paying for their risk? Because insurance company creates price based on the risk of the group and you end up paying the price for them. On the other hand, if you go out and get your own policy for example with the preferred rating you will be able to pay half the cost of what you are getting or pay the same amount and get double the coverage. This is one way in which your Insurance through your job can affect the healthy individual.
Life insurance through your job as long as your beneficiaries are set up properly will pay out immediately. Once your family sends the insurance company the death certificate they will send the money; there is no waiting period. There are some policies where you have to be alive for one year, two years or three years and in some case, four years before the policy will pay out in its totality. With a Life Insurance coverage through your job there is no waiting period in most cases, there maybe one or two out there but I am not aware of any. Life Insurance policy through your job is designed to pay out the full death benefit once the person that the policy is designated for passes away. Hence you don’t have to worry about that waiting period as it pays out right away in the full amount.
Life Insurance through your job does not have any cash value. The reason it does not have any cash value is that it is a term policy designed to be as cheap as possible to give you the most amount of coverage during that period. No term policy has cash value only whole life, and universal life policies have cash values. Once you stop paying the premium on your Life Insurance through your job that will be it. There are no cash values to back it up. This is what keeps the cost low because there is no cash value, no bells or whistles it is just a straight policy you have while working that is only beneficial to your family if you die within the period of employment.