term life insurance through employer

[kenmoremmm]

my wife is employed by the school district (her 2nd year now). they have a supplemental term life of $15k that you can enroll for and pay $36/yr premium.

we already have a $350k 30 year policy that we pay $230/yr.

dollar covered vs paid is way in favor of our $350k policy.

on the surface, my thought is to decline coverage. but, i'm curious how a term life policy works through an employer that has 1000s of employees. is there no actual term? if she dies after she stops working, is there no payout?

input appreciated.

[acepedro45]

Can't speak to the specifics of your policy, but generally speaking the "term" in group life insurance offered through an employer is usually just one year.

So the $36 only covers the coming year, nothing later.

Your logic is correct that the price of supplemental insurance is higher than your term on a dollar covered basis.

[nereo]

I've never found the term life insurance offered through my job to be a particularly good deal - but I'll add that we are youngish, healthy and active.  Through the private market I'm getting ~$1,500 per annual dollar of premium.  You are getting almost the same ($1,521 per dollar per year).  The term through work is just $416/year

I suspect it gets offered so frequently because people are very bad at math, or more to the point don't bother to compare apples-to-apples, and the insurance companies have realized this and exploited it.  $3/mo sounds like peanuts and $15k is about what most people owe on their cars, so it seems like a good deal.  Only you are smart enough to realize it isn't. 

[Proud Foot]

my wife is employed by the school district (her 2nd year now). they have a supplemental term life of $15k that you can enroll for and pay $36/yr premium.

we already have a $350k 30 year policy that we pay $230/yr.

dollar covered vs paid is way in favor of our $350k policy.

on the surface, my thought is to decline coverage. but, i'm curious how a term life policy works through an employer that has 1000s of employees. is there no actual term? if she dies after she stops working, is there no payout?

input appreciated.

Since you already have an external policy I would just decline the coverage. Yes your thought on the term life policy through the employer is correct. The "term" is the same as your employment. Once your employment is terminated your term life policy ends, some plans do allow the option to roll it into an individual policy but they may not be at attractive rates. IMO the only benefit of supplemental life insurance through your employer is that plans may have a guaranteed coverage amount. This is very beneficial to individuals who may be considered uninsurable  or high risk by an individual policy.

[Chris @ Saturday Financial]

I agree with the general sentiment in the responses so far.

You want to purchase enough life insurance, but no more. If the coverage your wife has outside of work is sufficient for you if the worst were to happen, then you don't need any more coverage. Buying more coverage is like buying a lottery ticket that you only get to cash if the worst were to happen. There's no reason to purchase any more life insurance than you amount you've determined you need.