Now, look at this example.
Only Group Life insurance
Henry is a teacher with a wife and a son and makes $70,000 annually. He only has life insurance through work and covers 2 times of his annual salary.
His wife, Claire works as an administrative assistant and makes $45, 000 annually. Henry and Claire purchased a home three years ago, their son is 2 years old. Their mortgage loan is $400,000, have a car loan of $32,000 and the potential cost of sending children to university will total at least $60,000 in the next 18-20 years.
Unfortunately, Henry died in a deadly car collision on the way to work one morning, that $140,000 can perhaps cover his final expenses, car loan, and child’s university tuition down the road. (Assuming $30,000 for funeral, taxes etc, $60,000 for education, leaving $18,000)
Claire will now have to figure out how to raise the child, take care of daily living expenses, mortgage payments, child, and her own support with the income from her job.
Vs having Individual life insurance.
If, Henry has individual life insurance with the death benefit of $500,000. The total amount his family would have received is $640,000 (Group Life + Individual life). Claire would have paid her mortgage in full, have enough for their child’s education, paid off her car loan, spend a generous amount on her husband’s funeral cost, and still have over $125,000 cash. With her regular income and savings, she will be more comfortable supporting herself and the child.