So you're considering taking the supplemental term life insurance offered by your employer this year. Why not? It's cheap and easy, right? Well, not so fast. While it may be a good deal for some, you may want to consider the following factors in your decision.
The reason? Take a look at the guy in the cubicle next to you. You know, the one who sneaks outside every 15 minutes or so for a quick cigarette and conveniently stops by the breakroom on every other trip for another Krispy Kreme donut. Well, chances are good that you are helping pay for his future heart attack in the form of higher life insurance premiums. That's right ... healthy employees subsidize the unhealthy ones. In most plans, the premiums are blended so that all employees pay the same premium, regardless of health or other factors (except coverage amount). So you may actually be paying more than you would if you purchased your own policy privately.
Another consideration is the cost of conversion. The cost of most policies increases significantly once converted. While that's not always the case, you will want to ask for a quote before signing up.
So employer sponsored term life insurance may not necessarily be as good a deal as it seems, once you consider these important factors. However, it can be good for some; like the guy in the next cubicle with the perpetual jelly stain on his tie.
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