New Employee's Guide to Life Insurance

For many people, the anxiety surrounding the paperwork of new employee benefits packages can be more stressful than the jobs themselves. Coverage limitations, premiums, exceptions, clauses and screenings are all a part of the new hire process and understanding these elements can help you make the best choices for your needs.

Life insurance is one of the benefits that can be most confusing for many of us, especially in the first few weeks of a new job. Many companies have scaled back benefits, so life insurance benefits are almost considered a luxury for many people. According to the Employee Benefits Research Institute, American companies will spend $2.25 billion on group term life insurance premiums in 2009. If you are one of the fortunate workers to receive these benefits, here is a guide to understanding life insurance options as a new employee:

The Handbook
Most employers will provide you with a new employee handbook that outlines the coverage you will receive for life insurance. This is where you should start your research process. In this handbook, you will find detailed descriptions of your life insurance plan (term or whole life), who is covered (you, your spouse, your children) and what your monthly premium will be.

What’s Covered?
Most companies offer group term life insurance as a rule. This means that your employer will purchase a policy for all employees as opposed to individual plans. The advantage with group term life policies is that they are cheaper for both the employer and the employee. The disadvantage is that your coverage is often pre-determined, so personalization is not an option. You may be required to submit for a health screening as well, which can reduce your coverage due to pre-existing conditions or chronic health issues.