Are You Paying Too Much For Your Group Term Life Insurance at Work?

It’s 11:00 P.M. the night before your open enrollment, and once again you have waited until the last minute to check the boxes for next year’s benefits. Every year, I help hundreds of clients review the corporate benefits they get from their company. As the booklets get larger and the benefits more complex, one of the biggest mistakes that I see employees make is not doing a shopping comparison with their voluntary group life insurance.

Remember these upcoming bullet points when it comes to viewing your company life insurance. First, there is no free lunch. Although the company may give you some life insurance that you get for no cost, if the insurance is more than $50,000 you’ll get something on your pay stub called imputed income. You’ll notice this if you look at your next pay stub and see GTL (group term life) as income on your paycheck. Second, when it comes to voluntary term life insurance and you choose 4x times your salary, there is actually a cost to buy this life insurance. Since term life insurance usually costs a certain amount of cents (or dollars) per $1,000 of coverage, it is important to actually analyze that amount of cost. Third, you need to see how often the cost bands change. Typically, (not in all cases) group term life insurance cost per 1,000 will go up every five years. Last, determine if the coverage is portable. Can you actually take it with you when you leave?

The analysis that is hardly even done is comparing a 20 year term insurance policy against the next 20 years of cost through the employer. Practically everybody I meet, compares today’s cost per 1,000 work against outside term insurance without looking at the change in the cost bands. The failure to do a proper side by side comparison on this could leave you paying more today for the voluntary life insurance you buy at work and potentially a lot more in the future. Not to mention if your health changes and you lose your job that you may not be able to get outside insurance. Take a close look at this so you don’t make the same mistake in 2015!

Written by: Ted Jenkin
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About the author  ⁄ Ted Jenkin @ Your Smart Money Moves

Ted Jenkin @ Your Smart Money Moves


My friends and family all think I’m a workaholic, but I say I’m just a guy that loves to help people do better in life.

My mother is still the only one that calls me by my real name Theodore Michael, my wife calls me Teddy, but for the rest of you it is just plain old Ted.

Ever since I was a little kid, I always loved money and being an entrepreneur. In fact, I still have cassette tapes of me talking to my grandmother at the age of five and my mother tells me all the time how much I played with money as a kid...

Read More About Ted Here

Ted Jenkin is a frequent guest columnist for the Wall Street Journal and Headline News Weekend Express. He is the co-CEO of oXYGen Financial. You can follow him on LinkedIn @ www.linkedin.com/in/theceoadvisor or on Twitter @tedjenkin.

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice.

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor regarding your individual situation. 

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  • Avatar
    February 3, 2015

    I wish I had gotten help on my life insurance policy before I enrolled at work. I signed with little information and no advice. It ended up being a bad move.

  • Ted Jenkin @ Your Smart Money Moves
    February 5, 2015

    That can definitely happen. Most people are simply afraid that they will get ‘sold’ something, so they skimp on the time necessary to do the research. Call me next time you need help with this.

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