Is Your Work Life Insurance Actually Enough? Here's How to Find Out

Is Your Work Life Insurance Actually Enough? Here's How to Find Out 

Most people with life insurance through their job have never looked at the actual number. They just assume it's enough. That assumption is worth questioning, especially since September is Life Insurance Awareness Month. 

A listener wrote in with exactly this problem. He's worked at his company for six years and knows he has some kind of life insurance benefit. He's never checked the details. He just figured it would cover his wife and two kids if something happened to him. Then a coworker mentioned that workplace coverage is often smaller than people think, sometimes just a flat dollar amount or one year of salary. That got him wondering if he'd been assuming too much. 

Here's how to actually find out. 

What Workplace Life Insurance Really Covers 

Many employer life insurance benefits come out to a flat amount, often around $20,000, or one times your annual salary. So if you make $60,000 a year, your coverage is likely $60,000. 

That sounds reasonable until you look closer. Nearly half of households relying only on workplace coverage would face financial hardship within six months if a wage earner passed away. One year of salary sounds like a lot of money. For most families, it isn't enough to replace years of lost income, pay off a mortgage, or cover college costs down the road. 

Step One: Find Your Actual Coverage Amount 

Skip the guessing. Contact HR or log into your benefits portal and pull the exact number. Confirm two things: whether it's a flat dollar amount or tied to your salary, and whether the coverage is portable. 

Portability matters more than most people realize. If you leave your job, get downsized, or get let go, your workplace coverage usually ends with it. You can't plan around a policy that disappears the moment you change employers. 

Step Two: Calculate What Your Family Would Actually Need 

This part takes a little math, but it's not complicated. Add up your outstanding debts: mortgage balance, car loans, credit cards, and personal loans. Factor in future expenses too, especially college costs if you have kids. 

Then think about how many years of income your family would need replaced. Subtract any savings or existing coverage you already have. Whatever is left is your real gap, not the number your employer gave you. 

Step Three: Consider Coverage Outside of Work 

Since workplace policies usually aren't portable, a separate term life policy can fill that gap and travel with you no matter where you work. Term life for a healthy adult is often far cheaper than people expect. A $500,000 or even a $1 million policy can run around a couple hundred dollars a month, depending on your age and health. 

Getting extra coverage isn't about overinsuring yourself. It's about closing an honest gap between what you have and what your family would need. 

Step Four: Check This Every Year 

Life changes fast. A new baby, a new mortgage, a new job, all of these shift what "enough" looks like. Set a reminder to review your coverage once a year so the number stays accurate instead of turning into another comfortable assumption. 

A Word on Faith and Provision 

Checking your coverage can feel uncomfortable, but it's not about fear. 1 Timothy 5:8 says, "But those who won't care for their relatives, especially those in their own household, have denied the true faith." That's a strong verse, and it points to something simple: providing for the people God has entrusted to us is an act of love, not anxiety. 

Facing this question now, in a calm season, is one of the clearest ways to say "I love you" to your family. 

Today's Win 

This week, pull your actual workplace life insurance summary. Write down the coverage amount and whether it's portable. Then do a rough calculation of what your family would really need. One honest number this week replaces years of assumption. 

Have a financial question of your own? Send it to financiallyconfidentchristian.com/question, or leave a voicemail at financiallyconfidentchristian.com/voicemail and Ralph might answer it on the show.