One of the most common ways that people get their life insurance today is through work. In many cases, you can pay for a term life insurance policy without having to fill out a medical history form or have a medical exam, and have the premiums taken right out of your paycheck. In some ways, this is probably the easiest way to buy life insurance.

Unfortunately, it can also be one of the most expensive ways to buy life insurance. Depending on your situation and your family’s needs, the coverage may or may not be a good proposition for you.

Before you sign up for life insurance from your employer, you need to do a few things:

• Understand the policy that’s being offered. Usually, life insurance offered by an employer is a term life insurance policy. That kind of policy pays a death benefit if you die during the term of the policy. Most of the time, a life insurance policy that’s offered by an employer will actually be additional coverage. Many employers provide a life insurance policy equal to one or two times your annual salary, and let you purchase additional life insurance beyond that.
• Look at your existing coverage. If your company already covers you for one or two times your salary, you’re off to a good start. If you have an outside policy in addition to the one from your employer, you may have plenty of life insurance.
• Compare premiums. Depending on your age and your health, sometimes an employer life insurance plan will be able to give you coverage at a lower rate than an outside company. Get some quotes from other companies and see how the premiums compare.
• Consider portability. Usually, if you leave your job, you will leave your life insurance policy as well. That can become a problem. If your health deteriorates, for example, you’re going to have a hard time finding someone to cover you if you lose your job or if you change jobs.  If you intend to retire from your current position, you might be fine, but even if that’s the case you run the risk of the unexpected, and could find yourself without life insurance altogether.

Photo via Alex E. Proimos