If I have group life cover through my employer, is it enough?

Key takeaways

  • If you enjoy group life benefits as an employee, don’t assume they are sufficient for you and your family’s needs as they may only cover a small percentage of what you need.
  • In addition to checking the cover amounts, you should also carefully check the terms of the disability cover in particular, but also severe illness and funeral benefits if these are offered.

If you are an employee who enjoys group life cover, consider yourself lucky, but don’t assume the cover is sufficient to meet your family’s needs.

One insurer estimates that group life benefits cover on average only 15% of employee’s needs. Can you afford not to at least check whether you or your family would be short 85% of the income you earn now should you die or become disabled before retirement?

Your employer or the trustees of your fund have devised the benefits with the average member in mind and the need to balance risk benefits against the need to save for retirement.

Your individual circumstances may require more or less of different types of cover. You, or your financial adviser, need to work out what you and/or your family would need to live on in the event of different scenarios: your death before retirement and you becoming disabled or severely ill before retirement.

Other things to check

In addition to checking if the cover amount is sufficient, you should check:

The definitions used for disability cover. Are you covered for an inability to do your own job, your own or a similar job, or any job? What happens if you suffer a permanent injury such as losing a limb, but you can still work? How are you covered?

Are you covered for temporary disability or only permanent disability?

Does your life cover remain in place if you are disabled?

What illnesses does the severe illness benefit cover?

Which family members are covered by your group funeral benefit? Typically only your immediate family, not your extended family, is covered.