For the first time ever, more people have life insurance coverage through their employer (108 million), than individually owned policies (102 million). Your first reaction to that might be "is that a bad thing? Coverage is coverage right?" Wrong. What you want is more individually owned policies than group life insurance coverage. This is for many reasons, but today we're going to focus on 4 of those reasons, most of which you likely don't realize about the life insurance coverage you have through your employer.

#1 - There's more to the group vs. individual stat than meets the eye

When you look a little closer, you'll find that households that have life insurance coverage through their employer is actually down to 46% , from a peak of 54% in 1984. The reality is that the number of employers that are offering group life insurance coverage is actually declining.

#2 - It's a benefit that you're not guaranteed to get

Most Americans believe that employers should be required to make life insurance coverage available (73%), but the reality is that employers are not obligated to offer it. On top of that, just because they're offering it now, doesn't mean they will next year, or the year after that, or at any time in the future. A lot of companies are in cost-cutting mode and are looking for ways to save money, and offering benefits like life insurance coverage could be taken away at any time.

#3 - If you have it, chances are very high it's not enough

One thing that's important to understand is that group life insurance coverage is not built to offer many options, perks, or give you the ability to customize it to truly fit your families needs. It's more of a generic "one size fits all" type of thing. Most employer-provided life insurance coverage is for one-to-three times your salary. So let's say you make $50,000 a year. Let's go on the high end of that and say your employer provides 3 x's your salary . . . your coverage amount is for $150,000. Sounds like a nice chunk of money, but in reality that $150,000 won't take you very far.

If your income is $50,000 a year, the death benefit would cover your family for 3 years max. And that's hoping absolutely nothing comes up financially that changes for your family, and we all know things always come up. Another really big change that can eat away at their insurance payout? If you pass, not only is your income gone, but they also lose their healthcare coverage that they had through your employer when you were alive. This is an incredibly expensive cost that can quickly eat away at the money they receive if they had to suddenly go out and buy coverage through the healthcare market, where premiums jump up significantly every year.

#4 - You have no insurability protection

Think about what would happen if your health changes while you only have employer-sponsored life insurance coverage. Your employer might decide to stop offering it, or you quit, retire, get laid off or fired. Most people don't realize that in all these situations that they'll lose their coverage leaving them with nothing. If you then go to get a policy on your own, this change in your health could drive up your premiums or take the option away from you entirely.

Bottom line? You want to be in control of your own life insurance coverage. An individual policy has the ability to blow group policies out of the water in terms of coverage, benefits, capabilities, and the ability to customize the policy to fit your specific needs and goals. And the best part? It stays with you no matter where you go career wise. And if your health changes? Doesn't matter, because as long as you continue to pay the premiums, you can't lose it. If your employer offers free coverage, by all means take it! It's free coverage. Just don't let that be the only coverage you have, because you're doing yourself and your family a huge disservice.

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