Open enrollment is right around the corner. Each year in November, open enrollment provides a window for individuals and employees to add or drop their health insurance or make changes to their coverage.
If your employer offers benefits like health insurance, a 401(k) plan, or disability insurance, you may want to consider taking advantage of these tools to help protect your health and finances long term.
What you may or may not realize, is that this open enrollment is also the best time for employees to add to, join, or change their enrollment in group life insurance plans.
Since you’re already thinking about benefits at this time of year, it makes sense to make sure you’re covered with the right type of life insurance for your needs and consider your options for supplemental coverage as well.
Ethos provides an opportunity to obtain supplemental life insurance coverage that your employer may not offer and makes the process simple.
If you don’t know what type of coverage you have or have been contemplating getting a policy, now is the best time to start understanding your options. Here are a few things you should know about life insurance prior to open enrollment.
How Life Insurance Works For Employees
If your employer offers life insurance coverage for employees, that’s great. Maybe you’ve even signed up. However, do you actually know how it works and what type of coverage you’re getting?
Most employers (not all) provide life insurance to employees at little to no cost. This is usually basic group life insurance with a typical coverage amount ranging from $25,000 to $50,000 or an annual employee’s salary (rounded to the nearest $1,000).
This is a good start if you’re not being charged anything on your end. In order to obtain basic group life insurance, you need to fill out any forms required by your employer by the deadline specified.
Is Your Employer Life Insurance Policy Going to Be Enough?
Once you find out how much coverage you can get through basic group life insurance through your employer, you need to determine whether it will be enough to protect your family and support them financially.
Usually, the low coverage amount is not enough. If you have a spouse, children, and debts like a mortgage, student loans or credit cards, one year’s salary probably won’t do much to provide your family with financial relief in the event that you were no longer around to contribute to the household.
It’s important to determine your insurable need and you can start by listing out all your assets and liability.
How would your family’s lifestyle change if you were no longer around and would their financial future be secure? Debt like private student loans are probably not a burden you’d want to leave on anyone you love.
All of these questions help justify the common rule of thumb that you should at least have 10x your annual salary in life insurance coverage. While basic group life insurance may be a solid start, it likely won’t provide you with enough peace of mind to know that your family will remain financially stable in the long run.
Weigh the Benefits and Drawbacks of Supplemental Group Life Insurance
So what options do you have if basic group life insurance isn’t going to be enough? During open enrollment, you may have the option to obtain supplemental group life insurance through your employer.
This will allow you to buy more coverage often equal to multiple times your annual salary. Since the coverage amount is much higher, you’ll need to fill out an evidence of insurability health questionnaire. You may also need to take a medical exam and release your medical history for review.
The great thing about supplemental group life insurance through your employer is that’s it’s convenient and you may qualify for better rates and coverage even if you have medical issues in the past.
The downside is that you can’t take your life insurance policy with you if you change jobs or get laid off. According to the Bureau of Labor Statistics, the average person can expect to change jobs between 9-11 times during their career.
Insurance costs tend to go up as you get older so if you obtain a group life insurance policy, then leave your job 5 years later, you could be stuck paying a higher premium for your new policy.
Consider a Separate Individual Term Policy
If you’re thinking you might want to diversify your life insurance coverage, you can still consider opting into basic group life insurance through your employer during open enrollment. In addition, you can explore the idea of getting a separate individual term policy independent of your employer.
With your own term life policy, you can choose your coverage amount, lock in a premium that fits within your budget, and have full ownership of your policy.
Ethos makes it easy to get term life insurance thanks to a hassle-free and streamlined process. You can obtain a quick quote and apply online in minutes, choose your beneficiaries, set up payments, and let coverage begin.
What Happens If You Miss the Deadline?
If you’re interested in taking advantage of an employer life insurance policy, be mindful of the open enrollment deadline to sign up for benefits. In the event that you don’t make a selection or fail to make a necessary change to your existing selection and the open enrollment period closes, your opportunity for coverage will be unavailable.
Keep in mind, that while you can always apply for supplemental coverage, it’s recommended to take care of during the same time that you’re considering other benefits so you can handle everything at once.
If you know you may not stay with your employer long-term, locking in a separate life insurance policy would be in your best interest as well.
If you're interested in learning more about life insurance with Ethos, you can get started by filling out a few questions to get a quote: