Am I entitled to Life Insurance through my Employer?

In a recent survey by Canada Life Group Insurance it was revealed that 2 out of every 5, that’s 39%, UK employees surveyed don’t have life insurance, which when worked out across the entire working population of the UK could amount to as many as 12.1 million people.

One of the main reasons cited for not having life insurance was the expense, but with ONS statistics suggesting that 1 in 8 men and 1 in 12 women in the UK die during their working life it only highlights the importance of ensuring relevant cover is in place, if nothing else but for the sake of our loved ones.

Marketing Director at Canada Life Group Insurance, Paul Davis commented on the findings, ?One of the most common reasons for not having life insurance is it is too expensive ? but employers can offer this to their staff for less than 1% of salary. Our survey shows staff would feel more valued, and therefore probably more likely to stay within their current organisation, if their employer provided a group life assurance policy. Group life assurance offers invaluable support ? for example, through a probate and bereavement helpline ? as well as much needed financial security to employees? families in the event of death. Auto-enrolment has presented the perfect opportunity for organisations to review their employee benefits packages.? In fact over half (59%) of those employees surveyed said that being offered life assurance by their employer would make them feel more valued.

What if I already have life insurance through my employer?

If you are one of the fortunate few who are already offered life insurance through your employer how can you be sure that it offers you the exact coverage you need and is suited to your personal circumstances? Many businesses that offer life insurance to their employees are likely to provide only the very basic policy. The advantage of this is that basic employer-provided life insurance is generally free. Here comes the but…although this is without doubt a bonus worth having it is unlikely to pay out enough to completely support your family when you die. It would be a shame to let this benefit go to waste, so you could always check with your employer whether it’s possible to increase the policy. An agreed set amount of money would be taken directly out of your wages each month to cover the additional cover and over time you wouldn’t even notice the difference in your pay packet. Remember, you need enough life insurance to cover all of your debts, including mortgages, credit cards, children’s education, car loans etc. and to support all of your dependents. As a guide, experts recommend you should look at getting cover that is worth 10 to 12 times your annual salary.

The big benefit of having life insurance through your employer is that it all gets sorted for you. Yes, you’ll need to fill in some personal details and medical history forms, but your employer will do all the donkey work. If you are part of a group insurance plan it is very easy to contribute extra through your monthly salary and because there are multiple people on the policy, the cost will gradually decrease.

What are the disadvantages of employer life insurance?

The fact of the matter is, if your employment ends, your life insurance cover will also stop. This could be because you have changed job, your employer goes out of business or may even be because you have switched from full to part time employment. Some policies may allow you to convert a group policy into an individual one, which you can take with you, but it is likely to come at a hefty cost. If you, unfortunately, have to leave your job due to a health problem, you will not only lose the insurance offered through your employer, but you will also struggle to purchase a new policy at an affordable rate.

You, also, have no say in which insurer your company choose to use. This may mean they use a lower rated insurance company simply because it saves them money to do so. Always check which insurer your employer uses, what they can offer you, how much it might cost you if you want to increase the policy and pay particular attention to the small print.

Should I buy my own life insurance instead?

We would recommend that you use your employer’s life insurance benefit, but also take out your own additional policy too. This will give you the peace of mind that should anything happen to stop your employment you are still at least covered by something. The benefit of having your own life insurance policy is that you are in control of it and will be able to choose the best type of policy both in terms of suitability and cost. But quite frankly you should never look a gift horse in the mouth and if your employer wants to give you something for free, we say ‘take it’.