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I Have Insurance Through Work, I'm Good... Right?

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7 Attributes a Financially Free Individual Possesses

April 11, 2021

I Have Insurance Through Work, I'm Good... Right?!

Many of you out there reading this article will relate to that statement. Once a year, employers go through an open enrollment period where you're able to view the coverage offered, sign up for what you want, and then move on and forget about what you just did until the next enrollment period when two things tend to happen. 1) People only look at changes to their health insurance coverage, and 2) many don't fully review their personal life changes and how that compares to other company benefits changes, and then just opt to continue with what they signed up for the previous year. Here are 4 reasons to review what you have and then find coverage somewhere other than through your company.

  • Cost. Especially for group life insurance, one would think that because of the economies of scale and the size of the "group," that getting coverage through work would get cheap rates for life insurance. Actually, the opposite is the case. It's quite surprising to see how much more coverage you can get for a cheaper price if you shop the open market. Sometimes you'll get double to triple your amount of insurance for your money.
  • Availability/options. Some people like group coverage because if offered, they view it as somewhat of a constant. It's there. But quite often there just isn't much to choose from based on your actual needs. Companies sometimes offer what I call "get you in the ground" coverage of $20k-$50k. The also may offer some type of multiplier of 1x, 2x, 3x etc. of salary. But what if based on your needs, you require a much higher benefit amount? What if you'd like to not have "rental" insurance and would like to have a permanent policy that has a cash value attached to it? These extra features are mostly non-existent when it comes to employer coverage and you'll have to find them out in the public marketplace.
  • SS Integration for Disability Coverage. One of the most enlightening aspects of your group long-term disability coverage is the integration with Social Security. On page 2 of everybody's social security statement, there's a number at the top that states what Social Security will pay you in the event you get disabled. The Social Security integration means that after 6 months of your disability, your group coverage is going to reduce what they pay you by the amount that you SHOULD be getting from Social Security. The don't care that on average it takes up to 2.5 years to actually get approved and start getting checks from Social Security. Two and a half years! It's always a good idea to find coverage on your own to cover that gap.
  • Lose your job. Here's the absolute most important reason to not have your life insurance coverage only through your company. The moment that they decide that you are not as important to them as they are to you, you're in trouble and no longer are covered. You can always gamble and wait to apply for benefits with your new job, but that is a gamble that may not be worth putting your family through. What happens if you are faced with an extended job search of 6 months to a year? That gamble gets extra dicey if you've got people who rely on you. Another thing to consider is that your new company may not offer an equal amount compared to what you just lost with your old employer.

Having all your insurance through your company can certainly be risky business. Some people are willing to take that on, and some just feel it's an easier pathway to just sign up instead of going out to actively seek their own policies. But finding what's right for you isn't too difficult if you know the right places to look, and are interested in saving more of what's yours both before and after something potentially bad happens.

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Cleaning Out Your Financial Closet

About the author

Jeremiah Thompson wearing a suit

Jeremiah Thompson

Vice President, Private CFO®

Originally from Washington, DC, Jeremiah has previously worked for Ameriprise Financial. For his final two years at Ameriprise, he led his office in production, client acquisition and financial planning.

After graduating from James Madison University in Virginia armed with a degree in Music Business (that's right.. Music Business), Jeremiah spent several years building two organizations that had groups touring up and down the east coast. Those unique experiences of running his own business gave him great insight into what it takes to actually run, market, and grow an organization from the garage to getting on airplanes to go to work.

While not working, Jeremiah loves to spend time being amazed by his wife Renée, young daughters Gianna & Sabina and sweet but crazy family dog, Fender. He's passionate about physical fitness, US Soccer, NFL Football, and music/studio production.


The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation.
Background and qualification information is available at FINRA's BrokerCheck website.

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