As a Guildford insurance broker that offers a wide array of insurance products, if there’s one trend that we’ve noticed over the last 20 years, it’s this: people often think they have more cover than they actually do.
And there’s one area in particular where there’s a significant gap between expected level of cover and actual level of cover, and that’s employee insurance policies.
A typical conversation might go like this:
Us: “Have you considered life insurance?”
Client: “I’m already covered through work.”
Us: “Shall we review your policy whilst you’re here just to double check?”
Client: “Yes, okay”.
Us: “Whilst this policy provides a certain level of cover, unfortunately, you’re not covered for X, Y and Z.”
Client: “Oh.”
We’re not discrediting insurance policies that have been built into an employee’s benefits package in any way. We think they’re great. And most forward-thinking companies that prioritise their team’s wellbeing offer this.
Not only that, but if they’re free and all you need to do is opt in, then you’d be mad not to. However, it is worth asking yourself ‘is my company’s life insurance policy enough?’.
The limits of employee insurance policies
Many employee life insurance policies offer cover of up to a year’s salary, sometimes more. Whilst this may initially sound good, it may not be enough to cover your existing financial obligations in tandem with supporting your family in the event of your death.
Insurance is an interesting topic. It’s the one thing that nobody really wants to pay for – but if the time ever comes for a claim to be made, it quickly becomes the best thing they ever bought.
Of course, in the event of your death you won’t have a view on it, but your partner might. And if they’ve received a pay-out equivalent to one year’s salary when they could have received 10-years’ salary for only a slightly higher premium, then it may make an already distressing situation even worse.
According to research carried out in 2022, 63% of the British public did not hold a life insurance policy because they thought it was too expensive*.
In many ways, this is more palatable than being underinsured through a workplace in the event of death. After all, they’ve made an active decision based on cost (although the same study also revealed that 42% didn’t even know how much life insurance costs to even be able to make an informed decision on whether or not to purchase it).
In the case of work polices that don’t provide quite the cover the policy holder thought, the policyholder clearly took active steps to protect themselves, and therefore their family, but for whatever reason didn’t secure enough cover.
The best way forward
The solution is simple. Either go through your employee life insurance policy in detail and ask yourself, is this enough. Alternatively, contact one of our Guildford insurance brokers who’ll be able to go through it on your behalf.
Our team of Surrey insurance brokers understands the insurance dilemma. Sure, it’s a cost and one that you may never have to use. But should you ever need to claim and you have paid into a policy that provides adequate coverage – be it for you or your family – then it may well have been the best investment you ever made.
Interested in arranging an insurance appraisal? Contact the Complete Mortgages team on 01483 238280 or e-mail info@complete-mortgages.co.uk.
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