Will COVID-19 raise life insurance premiums?
If you’re like most people, life insurance is meant to help your family cover the bills without your income, should you die prematurely, says personal finance expert Barry Choi.But if you’re only relying on whatever life insurance comes with your job, chances are your coverage falls short, he adds.It’s one of those money lessons Choi says he learned first-hand. While working as a TV producer for Canadian media, Choi said he had employer-sponsored life insurance that would have paid out an amount equal to twice his salary. When he started out, that worked out to around $100,000, which Choi says seemed a lot of money at the time.Life insurance provided as an employer-sponsored benefit is usually worth between one and two times an individual’s income, with the average between around $55,000 and $110,000, according to the PolicyMe report.
But Choi says he realized his workplace coverage was woefully inadequate when he got married, bought a condo and had a daughter.“I realized quickly that I needed an outside policy,” he says.At the time, he and his wife each took out a policy worth $500,000, which they figured would bridge the income shortfall left if one of them were to pass away, cover mortgage payments, and pay for their daughter’s education until she’d be financially independent.And with properties so much more expensive in today’s real estate market, Choi muses he’d a bigger policy if he were to upgrade to a bigger home.
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Where your job goes, so does your workplace coverage
Another reason for buying your own life insurance: “your coverage at work is only with you so long,” says Lorne Marr, director of new business development at HUB Financial.If you quit, retired or got the pink slip, you’d lose your life insurance. Your next job may not include life insurance. And even if you stayed put for the rest of your career, your employer may decide to reduce or nix your workplace life insurance coverage, Marr warns.