Group Life Insurance Not Always The Best
Life insurance is almost a must-have in company benefits and most companies provide supplement life insurance that allows employees to increase coverage easily at the time of benefit enrollment. This time last year, I discussed my election for term life insurance. For the sake of convenience, I finally bought about $500,000 in supplement life insurance for both my wife and myself at about $50/$100,000 coverage/year.
Apparently I overpaid. In September and October, in anticipation of the international move and more (perceived) risk, I acquired more term life insurance from AIG. My 15-year $1,000,000 policy only costs $360/year, and my wife's 15-year $750,000 policy bears only $275/year. Of course, we are non-smokers and our excellent health and young age (~30) helped.
Now that I am moving to a new statutory company and a new set of benefits apply. For supplement life insurance through employer, the rate will be $110/year(!) for every $100,000 coverage. That's almost twice more expensive than my coverage through AIG (and not to mention the 15-year fixed-premium guarantee). I don't blame the company; I don't think they are making a profit -- the statutory company I moved to was set up specifically for Microsoft worldwide expatriates, and most of them are in 40s and 50s (and overworked through their Microsoft or pre-Microsoft career). Fortunately, this time I already have my backup plan lined up.
The lesson: if you are younger or more healthier compared to the demographics of your company, you might be well served by securing your own term life insurance policy. It will be cheaper and give you more peace of mind.
To give credit where credit is due, Microsoft's benefits department is very vigilant in its handling of the 401(k) program. Earlier this year, the poor performing Fidelity Magellan (FMAGX) was dropped from the investment options. It is not an easy move considering Fidelity is the ... Read
Again, my insurance premium is coming down. Safeco just notified me that for the next six-month period, my premium will be $568.30, which is $2 off from the $570.30 I paid six months ago. I am not going to perform another price check for competitive ... Read
I ran into this same problem. I switched from my employers life insurance to a 30 year term to lock in the low rate at a young age.
I'm canadian and may not stay in the USA forever -- maybe 5-10 more years. What to do for life insurance in this case?
The purpose of life insurance is to protect your family (i.e replace lost income) in the event of your death.
Typically, you should purchase 5 to 7 times your annual salary in life insurance. Alternatively you can do long complex calculations to arrive at a figure as well.
If you have family (children/spouse/parents) that you support then you should carry some type of TERM life insurance. Whole life and other "investment" life insurance products are a scam and should be avoided.
One important point: company-sponsored life insurance plans only remain in effect for as long as you work at the company. As soon as you leave you lose that coverage in most cases. If your health has declined, just obtaining another policy could be problematic.
This is another good case for obtaining term life outside your company's plan.
The thrust of mm's posting applies to other forms of company provided insurance too. After I left an awful job as an associate attorney at a small law firm, I purchased an equivalent BlueCross BlueShield PPO health insurance on my own. I now pay $194.00 per month versus $287 for a policy that is offered through the same insurer and that offers equivalent benefits.
