As the hospitality industry continues to grow, so does the importance of life insurance for its employees.
For most hospitality workers, their job in the industry is their livelihood; if something were to happen to them, their family would be left without a source of income. This is where life insurance comes in.
Life insurance can be a lifeline for families who rely on their income from the hospitality industry. It can help to cover expenses like funeral costs, mortgage payments, and everyday living expenses. While no one likes to think about their mortality, it is important to consider this financial security alternative.
In this regard, we seek to highlight the importance of a life insurance policy for those working in the hospitality industry.
Life Insurance for the hospitality industry
Essentially, life insurance is a formal agreement between you (the policyholder) and an insurance company that requires you to pay the insurance company a set amount of money each month in return for financial security for your designated beneficiary.
This agreement continues until you die or cancel the policy, at which point the insurance company pays out the agreed-upon amount to your nominated beneficiaries.
The cost of life insurance is, therefore, an essential part of your financial planning.
The amount of life insurance you should have varies based on your income, the financial needs of your family, and the type of policy you have. Generally speaking, you want to have enough life insurance to substitute your income and provide financial support for your dependents if something were to happen to you.
Importance of life insurance for high-risk occupations
It is common knowledge that people working in the food service and beverage industries are at a higher risk of experiencing an injury or death that eventually leaves their families without an income, unlike online staff.
According to data by the US Bureau of Labour Statistics, these injuries are more common than we acknowledge.
Having life insurance for workers in the hospitality industry is an actionable step toward motivating employees and securing their futures.
Aside from training employees on how to use machinery in their workplace, lift heavy loads, and instill better money-saving practices, providing financial security through life insurance can be a major morale booster.
Unfortunately, while some employers offer life insurance as part of a benefits package, not all do.
Employees acknowledge that limited access to job security facilities such as life insurance through their employers contributes to the poor performance of most hotels and catering organizations.
How much life insurance should you have?
Having enough life insurance to replace your wages is important. Ideally, you want to have enough finances to ensure your family lives comfortably in the event of your demise.
An effective life insurance policy means that earning $50,000 per year would warrant savings of up to $150,000 in life insurance.
This amount would pay out $50,000 per year for three years to keep your family in a financially stable status. This should be enough to keep your dependents afloat for at least three years.
However, other factors will come into play when determining how much life insurance you need. For example, if you have a mortgage, you may want to account for your mortgage payments when calculating your life insurance needs.
In general, you want to have enough life insurance to cover your financial obligations and provide financial security for your loved ones during your death.
Cash value vs. surrender value
When you get a quote that satisfies your needs, you may want to compare policies and know the difference between a cash value vs. surrender value of a life insurance policy.
The cash value of a life insurance policy is the amount of money that the policyholder would receive if they decided to cancel their policy.
The surrender value, on the other hand, is the amount of money the policyholder would receive if they allowed their policy to lapse.
In general, the cash value is higher than the surrender value because the insurer has to recoup the costs of issuing and servicing the policy.
However, there are some exceptions. For instance, if a policyholder has held their policy for a long time, they may be entitled to a refund of some of the premiums they have paid.
Similarly, if a policyholder dies before their policy matures, their beneficiaries will receive the death benefit, which is typically much higher than the cash value.
As a result, it is important to understand the difference between cash value and surrender value before canceling or allowing a life insurance policy to lapse.
How to find the right kind of life insurance
There are several factors that you would want to take into account when looking for the right kind of life insurance. First, the type of life insurance policy you purchase will affect your coverage. It will also determine the price of your policy.
When choosing a life insurance policy, the coverage you receive is important. Most life insurance policies provide a death benefit coverage amount. You will want to choose a policy that offers enough coverage to cover your financial obligations.
You would also want to consider the term length of your policy. Choose a policy that provides enough coverage for your family’s financial needs. The price of your policy is equally important. You would want to select a policy that fits within your budget.
Types of life insurance policies
There are different types of life insurance policies to choose from. These include term life insurance, whole life insurance, and permanent life insurance.
Each policy comes with its own set of benefits and drawbacks. The most basic type of life insurance policy is term life insurance.
This policy offers coverage for a set period. The insurance company will pay out the death benefit to your nominated beneficiaries if you pass away during the term of the policy. This is often the least expensive type of life insurance policy.
However, it is crucial to note that it only offers coverage for a set time. If you die after the term of the policy, your beneficiary will not receive a death benefit.
Whole life insurance is another type of life insurance policy. This policy offers lifelong coverage. It is more expensive than term life insurance but also provides additional benefits.
Whole life insurance slowly builds cash value over time. You can use your policy’s cash value to help pay for any outstanding debt or expenses.
Permanent life insurance is yet another type of life insurance policy. This policy offers lifelong coverage. It’s also more expensive than term life insurance but provides more long-term benefits.
For example, this policy offers a death benefit that never expires. Like the whole life insurance, it also builds cash value that you can use to help pay off expenses and debt.
Why you must have life insurance in the hospitality industry
The hospitality industry is a particularly dangerous line of work, which makes life insurance even more important. If you work in the hospitality industry, ensure you are adequately protected with a life insurance policy.
Having life insurance for workers in the hospitality industry can help provide financial security for their families in the event of an untimely death.
