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May 16th, 2018
Life Insurance is well-known among families throughout the United States. For many, it’s a means of financial protection for loved ones left behind, and for others, it is a secondary necessity after all other financial obligations have been met. Unfortunately, statistics show that not having a life insurance plan may create a huge financial risk for surviving loved ones.
According to the Life Insurance and Market Research Association (LIMRA), “70 percent of U.S. households with children under 18 would have trouble meeting everyday living expenses within a few months if a primary wage earner were to die today. 4 in 10 households with children under 18 say they would immediately have trouble meeting everyday living expenses.”
For most families, having life insurance is the difference between make and break. It’s a benefit that relieves major financial pressure that most families don’t realize they need until it’s too late. It’s not always the most comfortable subject to discuss; however, every parent and working adult typically needs some type of life insurance policy. Yet, deciding which type of policy to get, and how to get it, seems to be a very confusing process for most.
The yearly analysis done by LIMRA best illustrates the severity of uninsured or underinsured American families. It states that “Approximately 50 million households recognize they need more life insurance, yet nearly 30% of households remain uninsured.”
Americans see a problem, yet aren’t doing what is necessary to remedy it. By offering voluntary life benefits, employers can help their employees create a better lifestyle for their families.
Obtaining Life Insurance
There are two avenues to obtain life insurance; through an independent agent, or through an employer. Both have pros and cons, and both paths render the same result. So, which is the right path?
As an employer, you can better your workplace by offering voluntary benefits. We break down the major deciding factors when purchasing a policy, and the benefit of being offered a policy through your employer.
Life insurance can be quite costly, which is one of the main reason why people don’t purchase it.
Independent agent: The most expensive plans are obtained by going through an independent insurance agent because the risk lies solely on the individual’s shoulders, and it is priced as such. These plans are not subsidized by any employer and are paid in full by the insured.
Employer: When obtaining life insurance through work, all employees are pooled into their own risk class, and the plans are typically priced significantly lower for the same benefit. This allows the employee to get the benefit their family needs, at a much lower cost.
Another main reason why people don’t get insurance is simply that they cannot qualify medically.
Independent agent: With most independent agents, applicants must complete a full physical exam to qualify for any stated amount of insurance. These exams have different degrees of invasiveness, all based on how much insurance is requested. The qualification usually consists of basic questionnaires, but can be as extensive as blood and urine sample or even standing EKG’s. Unfortunately, with such an extensive array of testing, test results often come back unfavorable, deeming the applicant uninsurable.
Employer: With an employer, there is little to no qualification process, the most extensive being a basic questionnaire. Going this route allows employees to obtain coverage in a much easier fashion, providing financial protection for the families of individuals that have health complications.
Will the policy go with you? Whether changing jobs, retiring or moving, you want the policy to be portable. The most common misconception about group life insurance is that it is not transferable.
Independent agent: Individual life insurance is completely transferable. It stays with you as you change employers or retire.
Employer: Through an employer, the same applies. Most often, voluntary benefits will transfer with you when severing from employment or entering retirement.
As an employer, by offering Voluntary Life Benefits you are providing significant financial security for the surviving families of a deceased employee. Doing so in an affordable, noninvasive way, will ultimately satisfy the major void in the life insurance marketplace.
For employers striving to create a better workplace for their employees, who want to provide much needed financial support for families against the unexpected, implementation of voluntary benefits is highly recommended.
There are several types of Life Insurance products available to groups:
Brown & Brown is the 6th largest insurance intermediary in the country. More than 75 years of success has enabled us to identify new opportunities, adapt our solutions and services to meet changing market demands, and satisfy the various needs of our customers. Backed by national strength and local presence, with over 300 locations and 8,500 teammates strong, we have solutions to fit all your insurance needs.