Life Insurance | Should You Rely on Employer Provide Life Insurance - Greyfont

Should You Rely on Employer Provide Life Insurance?


Life insurance is an important policy to purchase in today's day and age. Though a lot of you would think that buying a life insurance is not a necessity as you already secured with an employer-provided life insurance plan. But do you think is the latter good enough to secure your life? Studies have shown that owing an employer provided life insurance plan is not enough as it comes with its own share of drawbacks. This article explains you why you need not dependent on employer provided life insurance completely.


Below are the few factors that make employer-provided life insurance insufficient.


1. Not enough coverage:

When you are insured with an employer-life insurance plan, you do not get to choose the sum assured or even the type of life insurance policy you want to invest in. The coverage provided to each employer varies depending on the type of job and the designation held. Since life insurance needs vary from person to person, the coverage provided to you would not be secured enough to financially protect you and your family in times of distress. On the basis of your lifestyle, age, income, etc. you may need a cover of 1CR, but your employer would only offer coverage of 25 lakhs. With employer provided life insurance policy, you cannot alter the sum assured and even the type of plan for which the premium is being deducted from your salary.


2. You lose out on the coverage when you leave the job

Leaving the job means losing out on the coverage too. Though you may get a life coverage from the next employer, but you would have to stay unprotected during the interim period. If in the interim period, you become disabled or die, then your family would be left with no financial assistance. Also, the premium you would be paying would increase depending on your age. To prevent such a situation, it is always a good idea to have an individual life insurance policy in hand.


3. You do not get an option to choose the plan and the insurer

When you are covered with an employer life insurance plan, you do not get the option to choose the type of the life insurance plan, the insurance company and also the sum assured. Many a times, companies opt to buy a life plan from insurers who do not have a good claim settlement ratio. Companies usually consider thee premium quotes and choose any insurer, ignoring the company's claim settlement ratio and services offered.  This can lead to claim rejection in the future as claim settlement ratio clearly defines the number of settled by an insurance company in relation to the number of claims received. Remember, the purpose of buying life insurance policy is to secure the life of your loved ones in your absence and also to provide financial assistance in the future. A rejected life insurance claim holds no value and loses its sole purpose.


4. Your claim can be rejected if you have a health problem

You may feel good when employer provided life insurance companies do not ask you to undergo a medical test for insuring your life. But if at the time of the claim, if the insurance company finds out that the cause of the ailment is due to a pre-existing disease, then they can rightfully reject your claim. Therefore, it is always a good idea to opt for an individual health insurance plan while you are young and healthy. Also, always disclose the facts pertaining to your existing health conditions such as diabetes, cholesterol, etc.


5. Too expensive:

The premium for the employer-provided life insurance policy is deducted from your salary; you have no control over it. You may actually end up paying a high amount for a low coverage. Hence, it is always a good idea to explore different options and not blindly rely on the employer provided life coverage.



Employer provided life insurance plan may not always be a good option to go with. As a result, you should always have a life insurance plan that will provide you coverage till your last breath unlike employer provided life plan. Take the benefit of both the policies simultaneously and insure your family with a wide life cover.


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