Money, markets, and what matters today.

Tuesday, October 27

3 Insurance Traps That Hit Families When They’re Most Vulnerable

3 Insurance Traps That Hit Families When They're Most Vulnerable

It’s benefits season. The packet arrives, you click through it in ten minutes, and you pick whatever you picked last year.

A Yahoo Finance segment from TheStreet, posted October 17, makes the case for slowing down. Guest Phillip Snyder, CLU, a senior vice president with The Warner Companies, covered reviewing your full benefits menu, sizing your life insurance, and spotting enrollment scams. Here are three traps from that conversation, checked against the data.

Trap 1: Assuming the life insurance at work is enough

Many families rely on the coverage that comes with a job. According to LIMRA’s 2026 Insurance Barometer Study, 47% of insured Americans have life insurance through their workplace, and 27% have workplace coverage and no individual policy at all. LIMRA puts it bluntly: workplace benefits are the sole source of protection for many families.

That works only if the amount is enough and you still work there. Your employer’s plan sets group coverage, not your family’s bills. And if you leave, get laid off, or retire, it may not come with you unless the plan lets you convert or port it.

How exposed are families? In the same LIMRA research, 47% of adults said they would feel the financial impact within six months if a primary wage earner died. Only 29% said they would stay financially secure for more than two years.

The fix: Snyder’s approach is simple. Ask what your family would need if you weren’t here: paying off the house, educating the kids, and covering daily living costs. Put a number on each, as best you can. Then compare that total with what your employer actually provides.

Here’s a hypothetical. Say you earn $60,000 a year and your workplace policy pays one times your salary, or $60,000. If your family would need, say, five years of your income, that’s $300,000. The work policy would cover a fifth of it, and it could end if you leave the job.

If there’s a gap, term life insurance is usually the cheapest way to close it. “It’s so inexpensive that you can buy so much life insurance for very little money,” Snyder said, pointing to young families raising kids as the people who benefit most. And don’t guess at the price: LIMRA found 46% of Americans base their cost estimate on a “gut feeling” or a “wild guess.” Get real quotes.

Trap 2: Treating open enrollment as a health-plan-only decision

Health coverage is the biggest and most expensive choice in the packet, Snyder said, but it isn’t the only one. He listed retirement plan contributions, life insurance (including options to buy more for yourself and family members), disability coverage, dental and vision, and a menu of voluntary benefits that can run from pet insurance to long-term care.

A few questions worth asking: How much life coverage does work provide, and can you buy more? If an illness kept you out of work for months, what would disability coverage pay? Are you getting the full retirement match? And while you’re in the portal, check your beneficiary forms. A marriage, divorce, birth, or death can make an old form wrong.

You don’t have to figure it out alone. Snyder pointed people to HR, benefits staff, and the broker running the plan.

If you buy your own health coverage: Medicare Open Enrollment runs October 15 to December 7. HealthCare.gov Open Enrollment for 2027 coverage runs November 1 to January 15, and you need to sign up by December 15 for coverage starting January 1.

Trap 3: Falling for an enrollment scam

Scammers know the calendar. The FTC says health insurance scams pick up during Open Enrollment for Medicare and the Marketplace, with some paying to appear at the top of search results and using look-alike government web addresses and logos.

The stakes are real. In 2025, consumers reported $15.9 billion in fraud losses to the FTC, up from over $12 billion the year before. Imposter scams were again the most reported type, with more than 1 million reports and over $3.5 billion lost.

The segment’s advice was blunt. Your employer and plan already have your Social Security number and employee ID, so anyone legitimately helping with your benefits doesn’t need to ask. “Don’t respond to anything you haven’t solicited,” Snyder said. He also recalled a radio segment about companies selling lists of people such as recent widows, information whose only purpose, he said, is to target them.

The fix:

  • Type the address yourself: Medicare.gov, HealthCare.gov, or your employer’s real benefits portal. Scroll past “Ad” or “Sponsored” results and look for the .gov ending, as the FTC suggests.
  • Don’t pay for help enrolling. Signing up through the Marketplace is free, and the FTC warns against anyone who demands cash, crypto, or card numbers to get or keep coverage.
  • Be suspicious of plans that push freebies and downplay coverage. The FTC says ads that focus on “free stuff,” like money for groceries, deserve a much closer look.
  • Before buying any policy, stop and confirm the agent and company are licensed with your state insurance department. The NAIC’s “Stop, Call and Confirm” advice also flags high-pressure, “sign today” pitches and prices far below comparable coverage.
  • Report scams at ReportFraud.ftc.gov, or for Medicare, 800-633-4227.

The Bottom Line

Each of these traps catches families when they’re busy, distracted, or grieving, and each is easier to avoid before that moment arrives. Add up what your family would need, compare it with what work provides, and fill a real gap with affordable term coverage you own. Check every benefit in the packet, not just the health plan. And treat any unsolicited message about your coverage as suspect until you’ve verified it yourself.

Sources and Further Reading

More from DFN