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3 Questions to Help Your Employees Select Life Insurance

These questions can help employees make the right choice for their family

by Nick Paulish, June 6, 2018

Life insurance can give your employees peace of mind about their families’ financial futures, should the unexpected happen. However, everyone is different, and an employee’s need for life insurance will depend on the individual and their family circumstances. Here are three questions your employees should consider so that they make the right choice for their family when selecting life insurance.

What do they need?

The answer will probably differ depending on the person. When discussing this with your employees, tell them to consider all of their near- and long-term financial commitments. Employees need to take stock of their current standard of living and think about what it would take for their families to maintain that standard over the long term.

Here are some examples of financial commitments that employees should consider as they determine the appropriate amount of life insurance:

  • Is there an existing home mortgage and/or other installment debt to consider – like student loans?
  • Is the employee providing financial support to adult children and/or aging parents?
  • Are there younger children who will be attending college?

Encourage your employees to think about all their financial commitments as they determine their life insurance requirements.

What do they already have?

If your company offers life insurance, make sure your employees know exactly how much is covered through the employer-paid portion as well as how much voluntary life insurance coverage, if any, the employee has enrolled in. Employees should know not only how much life insurance they can get through work, but also how much of this benefit you as the employer are paying for – so they know the value they’re getting from the benefits you offer.

In addition to employer basic coverage, employees should take into account any personal life policies that they may have. Finally, employees should be encouraged to consider other forms of benefits to which the employee’s family may be entitled (e.g., death or survivor benefits of a defined benefit pension plan and Social Security) and existing financial assets (e.g., 401(k), Roth and Traditional IRAs, or personal savings).

How can they close the gap?

After an employee determines how much they need and understands exactly how much they have, they may find they have a gap in coverage that they’ll want to fill through the purchase of additional life insurance coverage. If your company offers voluntary life insurance buy-up options to employees, this is generally the cheapest and easiest way to go as life insurance policies in the workplace can often be relatively inexpensive. Group life insurance plans typically offer employees fewer restrictions, and with Term Insurance (i.e., a non-permanent form of life insurance coverage) employees are able to obtain more coverage for less money than they would get through Whole Life policies (i.e., a permanent form of life insurance coverage).

If voluntary coverage through work isn’t an option, employees could also explore purchasing life insurance from one or more of the following sources:

  • Affinity groups (e.g., college or university alumni groups)
  • Professional associations (e.g., American Automobile Association, professional societies, etc.)
  • Life insurance websites
  • Local life insurance agents

Answering these three questions can help your employees choose the appropriate amount of life insurance for their family’s needs. Helping your employees understand what they have and what they need both now and in the future can allow them to make a smart financial plan and ensure that their loved ones are appropriately provided for.

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About the Author

Nick Paulish

Nick Paulish

Nick Paulish is Vice President of Benefits Consulting for Fidelity Health Marketplace.  Nick has over 30 years of industry and consulting experience providing employers with strategic advice and counsel regarding their benefits programs.  He holds the Fellowship status within the Certified Employee Benefits Specialist designation. Nick is also a nationally licensed as an Insurance Advisor, Consultant and/or Producer.