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Losing Your Employer Life Insurance: What You Need to Know

Licensed Life Insurance Agent/Marketing Manager
April 02, 2020

Losing your job is tough enough. Losing your benefits can add even more stress. Consider private life insurance instead of relying on your employer based group insurance. 

If you are single with no dependents or debt you may not need a replacement policy. However, if you have a spouse, any dependents, and/or debt you should consider replacing the coverage you lost from an employer. 

Employer group life insurance

Employer life insurance is also known as group life insurance. The great thing about group life insurance is that you can't be denied for coverage. The bad part is you may not be able to keep it once you are no longer with the company.

If you are in a situation where you are no longer employed with the company that provided coverage, but are still in need of coverage, you can get life insurance on your own through a life insurance company. 

Getting life insurance coverage when you are not employed

Your employer received life insurance coverage through a life insurance company and you can do the same on your own. There are a few questions to ponder before you decide the type of policy and coverage amount you need. 

  • What types of life insurance policies are available to me as an individual? 
  • How do I know how much life insurance I need? 
  • How much will it cost?

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Types of life insurance policies available

At a basic level there are two types of life insurance policies: term life insurance and permanent life insurance. Permanent life insurance houses several types of life insurance such as whole life insurance and universal life insurance. There are a few key differences between term and permanent life insurance coverage. 

Term
Permanent
Coverage duration? Coverage lasts set time (10,20,30 years, etc.)Coverage designed to last a lifetime
Does it expire? Yes, and you likely won't get your money back when it doesNo expiration as long as premiums are paid
Can I borrow moneyNo, no cash valueCan borrow, tax-free
Expensive?InexpensiveMore expensive than term

In short, a term life insurance policy only lasts for a certain period of time (or term). Companies offer different term lengths, but it isn't designed to provide coverage for your entire life. Since term life insurance is only active for a certain period of time and it doesn't accumulate a cash value, it is cheaper than permanent policies. 

A permanent policy uses part of the premium you pay to build a cash value in the policy, which a term policy doesn't have. Some cash value builds through a savings account, some through mimicking the market, while other can be directly invested in the market. The way your policy can grow its cash value is dependent on the type of policy you choose.

How much life insurance do I need?

There are many factors you should consider when determining how much you need. It is important to note that most likely the amount you had through your employer wasn't enough, so consider this a way to get the coverage you actually need to be protected. 

There are several different methods for calculating how much you need. Most of the time individuals get life insurance to cover any debts they have and to replace their income. Here are some general things you should consider if that is the case for you:

  1. Income - how many years your family would need support and multiply by that number. 
  2. Mortgage - the amount needed to pay it off
  3. Debt and final expenses - calculate any debts and an estimate of funeral expenses (the average funeral cost is between $7K-$10K.1)
  4. The cost of sending your kids to college

If you want an issue use tool to help you see how much you need, check out our life insurance calculator

How much will life insurance cost?

At a high level your costs are based on a combination of age, health, gender, and lifestyle. As mentioned previously the type of policy you choose will also impact the cost of your policy, along with how much coverage you need. 

Now that you know how much you need, get an idea below of how much it will cost. 

Conclusion

Losing your job and the benefits that go along with it can be really tough. The good news is it is easy to replace your life insurance coverage and you may even get more coverage than you originally had. 

If you aren't sure where to start, give one of our life insurance agents a call and they can walk you through the process. 

If you are a ready to get started, get a life insurance quote from multiple companies and get started on your journey to getting life insurance. 

Written by
Chelsie Ball
Chelsie is fixated on developing innovative ways to present complex ideas and maneuvering people to the information they need. She has worked in digital marketing for the past eight years and has been a licensed life insurance agent since 2010. When she isn’t looking out for the user, you can find her watching Netflix or desperately trying to find a real hobby.