Purchasing Life Insurance Through A First Job
Purchasing life insurance through a first job gives you the opportunity to enjoy the benefits of a life insurance policy at affordable group rates. Employers who place a high value on their employees' well being offer life insurance as a benefit of employment. If you have a spouse and children to support, your benefits will give them the financial resources they need to cope with your death and maintain a comfortable standard of living if anything unexpected should happen to you.
Even if you have no dependents, your life insurance benefits can repay your car loan, student loan, credit card balances and other debts in the event of your unexpected death. Your benefits would also cover the cost of your funeral and burial. With adequate financial benefits in place, your parents and other loved ones would have the necessary resources to pay for your final expenses and settle any unpaid loans.
Life Insurance Group Rates
if you are offered a life insurance policy through your first job, you will typically be required to pay a premium for your coverage. However, the amount may be lower than the premium you would pay if you were to purchase life insurance on your own. Employers who offer life insurance as a benefit can do so at a group rate, which may be cheaper than the cost of buying an individual healthy adult life insurance policy.
Before you purchase life insurance through your job, it pays to learn the basics of this important financial product so you can decide whether your employer's policy truly meets your needs. The life insurance policy that you purchase through your first job is likely to be a term life insurance policy, which will pay out a sum of money to the people named in your policy -- or beneficiaries -- if your death occurs within the time frame established in your contract. If you purchase a 20-year policy and you live longer than the end of your contract, your loved ones will receive no benefits.
Some employers offer whole life insurance as a benefit. However, because this form of permanent life assurance is more costly than term life insurance, having the opportunity to buy whole life insurance through your first job may be rare. Whole life insurance guarantees that your beneficiaries will receive a sum of money whenever your death takes place. Whether you die at the age of 25 or 95, your survivors will receive the sum assured. Whole life insurance also includes a cash value, which gives your policy value as a savings and investment account.
Transferring Your Life Insurance Policy
In our changing economy, most young adults do not stay at their first job until they retire. If you purchase life insurance through your first job, it is likely that you will be required to transfer or cancel the policy at some point in the future. If you decide to transfer the policy, you may pay higher premiums when you are no longer covered under your employer's group rate. Your premiums may also rise by virtue of your being older at the time you switch jobs.
If you cancel your policy in order to buy new life insurance from another insurance company, you may incur fees when switching from one provider to another. You may also lose the cash value you've accrued in your savings account if you have a whole life insurance policy. Before you purchase life insurance through a first job, consider the financial implications and costs of transferring your cover or buying new life insurance if you should decide to switch jobs.
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