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Three things to consider if you have an employee life insurance policy

graham hill

By Graham Hill
Executive Manager, Life Distribution

30 June 2021

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Many companies offer free life insurance to their employees. Generally, this will automatically provide life insurance cover without the need for underwriting. 

Here are three things to think about when it comes to employee life insurance cover.

1. What does your employer’s life insurance offering cover? 

Consider whether the policy only provides life cover or if the it includes other benefits like trauma or income protection cover.

It’s also important to understand your sum insured (how much you’re covered for) and whether or how that changes over your time with the company. For example, life cover might be based on your annual income, so you may want to check if/how your life cover updates when your salary increases. 

Knowing exactly how much and what cover you already have through your employer is a good starting point if you are thinking about whether you need life insurance and to ensure you have the right amount and type of cover for your needs. 

2. What are your financial needs?

Whether your employee life cover is a fixed amount or is based on your annual salary, deciding whether this is enough cover for you depends on many factors.

Having a discussion with an insurance adviser about your financial commitments, existing safety net and possible risks will help you to decide whether your employee life cover is enough for you, or whether you need it to be topped up.

3. How will your personal and employee cover work together?

If you decide you need more cover than you have under your employer’s insurance scheme, there are different ways to structure your own cover so that it works well with what you already have. The adviser who manages your employee insurance scheme may be able to explain your options and help you structure any additional cover to suit your needs.

Your employee cover might affect the maximum amount of life insurance cover you can get privately, or it may change the wait times and sums insured you want to choose. It could have an impact on whether you choose level or stepped premiums, or the process you need to follow if you make a claim.

If you change jobs, you might find you have the option to continue your cover and take over the cost yourself. Talk to your employee scheme adviser about what might work best for you. You can also find an adviser here.   

You don’t have to figure it out on your own.

Life insurance provided by your employer can be a great basic insurance package. It may be all you need or may cover some of the cost of a more extensive insurance package you design.

There is no straightforward answer as to whether the life cover provided to you by your employer is enough, but it’s important to understand what you have in case you ever need to use it.

An adviser can help you understand your cover can offer you personalised advice to make sure you’ve got the right type and level of cover to suit you. If you want to find adviser outside of your employee scheme adviser, we can help you find one.

The information in this article has been compiled from various sources and is intended to be factual information only. Full details of policy terms and conditions are available from Asteron Life Limited or your financial adviser. For advice on product suitability, please contact your financial adviser. While we take reasonable steps to ensure that the information contained in this article is accurate and up-to-date, it is subject to change without notice. Asteron Life Limited and its related companies does/do not accept any responsibility or liability in connection with your use of or reliance on this article.

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