It depends. The “free” coverage is a great employee benefit. However, the additional insurance you can purchase voluntarily, for a fee, generally is not a good deal.
Group life insurance rates are based on spreading the risk over a large number of people, therefore making it affordable for the unhealthy. If you can qualify for preferred rates why would you want to subsidize the unhealthy? Plus, group rates are generally only locked in for 5 years at a time. If you are healthy there is NOT a scenario that doesn’t make sense for you to opt out of your group life insurance plan.
Top 3 reasons why you should at least go through process to see if you qualify:
- Individual rates are locked in for whatever time frame you choose. You can choose any death benefit.
- When you retire you are going to have a choice on what type of pension to pick. If you pick the one with the larger monthly benefit, you will need life insurance to protect your spouse. Most individual policies can be easily converted to a permanent policy protect your pension. Plus, your conversion is done based on your rating classification TODAY not when you retire. Unless you think you are going to be in better health when you retire why would you risk it?
- Individual policies are portable. You will never have a “gap” in coverage if you change jobs.
What’s the downside?
- You have to complete an application.
- You have to get a physical (at insurance company’s expense).