“After an in-depth analysis, you need additional insurance.”
”What? But I have insurance through my employer!”

I get it. Why spend money for coverage I got from my employer?

It is a very common response I get when from clients. But here are some REASONS WHY (inside joke) that’s a BAD IDEA:

1️⃣ YOU’RE NOT THE CLIENT: Employers will often take group benefits for two reasons: to attract and keep workers, and make a tax-deductible expense. No biggie, right? 🤷🏽‍♀️

Well, that means your coverage will depend on what the employer feels you’re worth spending on AND their own budgetary limitations. Therefore, coverage will have some…penny-pitching.

2️⃣ PENNY-PINCHING POLICIES: I’ve seen some interesting group insurance contracts. One had a permanent exclusion on suicide. Another policy excluded any coverage during a leave of absence, even if you’re still an employee. The strangest one, excluded death or injury incurred from voluntary asphyxiation (I won’t go into what that means).

In terms of disability insurance, some will require professional rehabilitation and reorientation after just 2 years. However, stats show that if you’re disabled for 2 years, you’re likely to disabled for MUCH LONGER.

3️⃣ Rarely are they ENOUGH for your needs: If you’re in the lower ranks of workers, life insurance will often cover one-year of salary. Higher earners will have 2x or 3x salary. When you factor your liabilities and your family’s long-term needs and objectives, a 100k death benefit will be woefully insufficient.

4️⃣ Additional coverage can be EXPENSIVE: Insurance is the transfer of risk to a third-party for a price. That price is determined by how the insurer calculates risk. When the insurer is willing to cover you WITHOUT a medical questionnaire, they’re adding that risk into the price.

Other coverages that you may believe to have, will depend on whether or not you submitted proof of insurability. Many employees are unaware of the requirement.

An advisor should factor in the employer-sponsored benefits but only to a degree because you will likely leave your employer or you might get fired in next few years.

If you’re thinking about becoming a business owner, then your employer-sponsored benefits don’t matter for long-term risk planning. You will need an individual policy.