I already have life insurance through my job. Is it permanent?

The Truth

The odds are higher than you think that it is not. Employers typically gather life insurance for their employees in groups, called Group Life Policies. These policies are almost always term, for multiple reasons:

First, a whole life policy is present for a client's entire life, and has premiums that would still have to be covered regardless of your employment at that company or not. If you were to quit, get fired or retire, there would have to be a conversation that the employer has with you on if you're willing to keep making these payments. The complexity of this conversation is not something companies even want to bother with, as insurance premiums are higher for whole life policies for the same amount of coverage as a term policy anyway. The question then becomes: Why bother with a permanent life insurance policy for an employee if said employee will not be a permanent asset to your company?

Second, it is notoriously cheaper for the employer to insure by group rather than by individual. This means that unless you are very high on the food chain at your job and are personally handed a customized policy, you are currently protected under a term life insurance policy. To find this out, contact HR at your job to ask them about your policy information- making sure to question if your policy is temporary or permanent, and if the premiums will ever increase.

The Problem

The issue that does arise with only having a term life insurance policy and no backup, is uncertainty. If you were to quit, get laid off or retire the policy would expire immediately with the company you used to work for, and you would not have life insurance that night.

Due to this fragility in term life insurance policies offered through employment, people opt to get a separate policy written outside of work from a life insurance broker, that ends up being a whole life policy. This policy is much smaller and is used as a safety net lest anything were to happen between the employer and the employed that the employed got blindsided by.

Remember- term life insurance is just as the name implies: life insurance for a term only. Although occasionally renewable for a higher premium, term insurance does terminate, and this should not be the only life insurance one has in place if they have the goal of peace in mind at hand.