What’s up Internet? My name is Ian Bloom. Welcome to Nerd Finance! I’m your resident financial life planner and huge nerd! In today’s episode, I am going to be talking with you about life insurance. Which is not thrilling so if you are trying to understand the three core types of life insurance please go-ahead and watch another video that I put on this channel that compares the type of life insurance to different starter Pokemon. I think that’s a pretty interesting take and foundational knowledge of life insurance would be helpful if you’re going to watch this video.
Let’s start talking about employer-sponsored life insurance. Most employers include some amount of life insurance benefit regardless of whether you pay for it. So, you may have one or two times your salary in life insurance benefits. Hypothetically, let’s say your salary is $50,000, well you may have a $50,000 or $100,000 life insurance benefit that the employer pays for. It’s important to know what this is, but it’s also important to recognize that 50 or $100,000 isn’t going to go very far if the household is used to your income. If you’re married, and especially if you’re married with children, this maybe time to consider some more.
For instance, if my wife were to pass away I would want way more than $50,000 to continue my Magic: The Gathering habits. All jokes aside, when somebody passes away, the last thing you want to be worried about is finances. Just recognize that employer-sponsored life insurance is usually not all that you need.
The second thing to know about employer-sponsored life insurance is that it doesn’t come with you. It’s more like an obelisk than it is portable. So, that means that when you leave your employer, if you have additional life insurance especially beyond the base that they give you, it is not necessarily going to come with you. You may want to consider if you’re going to purchase additional life insurance to purchase it outside your employer, because having it at your employer may seem inexpensive at first, but if you’re in pretty decent health and you apply outside you can usually get some policies that are cheaper – with more flexible benefits – and that have a guaranteed period of time that they will be active for. Whereas your employer sponsored policies are good simply for as long as you work at that employer.
Finally, and wrapping this all up, almost all though not all of employer-sponsored life insurance benefits are term insurance benefits. This means that they are temporary in nature. So, if you’re out there looking for a permanent life insurance policy (though I don’t usually implement those with my clients) permanent life insurance policies can usually be found out in the private market, but not within your employer-sponsored plans.
If you have questions about how much life insurance you should have, or if all this stuff just seems like a lot to you, don’t hesitate to reach out. I’d be happy to have a conversation around your life insurance benefits. In any case, I hope that this video wasn’t too terribly boring for you and I hope you have a wonderful day!
