Supplement Life Insurance: An Overview
Supplement life insurance is often a nice perk to receive in your employer’s benefits package. In a traditional supplement life insurance policy (sometimes also known as group life insurance) a single policy covers an entire group of individuals, provided the company is involved in the plan. Your employer has to be involved with this type of plan. Otherwise, it would not be classified as an insurance benefit, but as an expense that he or she must contribute to. Supplementing benefits in a group plan is tax-deductible to the employee.
You can purchase either a whole life insurance policy or a term life policy in addition to a supplement. You can also choose to purchase a whole life insurance policy and add riders such as accidental death and renewable term life insurance policies. In most cases, you will need to get a doctor’s prescription before getting a supplement.
Most individuals purchase both a term and a whole life insurance policy from the same company. However, if a person wants both kinds of policies at the same time, they must buy them from two separate companies. Whole life policies are usually sold in blocks of one million and require yearly payments. These policies pay a death benefit upon death, a cash value benefits upon surrender of the policy, and a benefit for the remaining period of the plan. Premiums are paid according to your age, whether you smoke, and whether or not you are a smoker.
Term life insurance coverage, also called individual life insurance coverage, is usually sold in blocks of one million. In essence, the same basic features apply to these types of policies. The main difference is that there are no death benefits. Instead, premium payments pay the amount of the premium for the number of months the individual lives, and there is a potential cash value to the policy, which is expected to rise with the amount of the premium.
A group term life insurance policy is sold by a single insurer and is generally less expensive than an individual life insurance policy. This is because the group insurance company breaks down the cost of the premiums by the number of individuals in the group. This means that each person is charged a different premium amount. There are usually a number of features and benefits available from this kind of policy. Many people choose to purchase a combination of both term and permanent policies.
When purchasing supplemental life insurance policies, people should be aware of what kind of features are provided. They may include an additional benefit, known as the death benefit. This is payable upon the death of the policyholder. Sometimes, the benefit may also be payable to the beneficiaries. These additional benefits will vary between individual and group supplemental life policies.
The basic concept behind life insurance policies is that they provide coverage for a specific period of time. This is usually the lifetime of the policyholder. Many people prefer to purchase a term life policy because they allow the policyholder to borrow against the cash value of the policy while paying premiums.
This allows the insured to pay the premiums, without having to wait until they have passed the age of 70. However, many people choose to purchase whole life or universal life supplement policy, as it offers the same benefits but allow the insured to extend the time frame of the coverage, as well as receive additional benefits.
The purpose of life supplement policies is to add to the money value of the insurance. Because of this, these policies are usually more expensive than those that are simply standard life policies. This is because the extra money provided is not invested immediately.
Rather, it is invested during a later time frame, usually after the death of the insured. However, with an adequate amount of income from dividends and investments, the life supplement policy can pay enough money to help defray the costs of the policy, and can help make the premium affordable.