No one likes to think about the misfortunes that might come our way. Whether you’re single or married, a parent or grandparent, insurance coverage can help ensure financial security for you and your loved ones. Insurance may be the key to helping safeguard your future.
Employer-provided insurance plans may not provide enough protection, which is why plans like the AIA Trust programs for Life, Disability, and Accident and Accidental Death and Dismemberment (AD&D) Insurance can be valuable. Insurance plans that are not employer-provided also help you maintain coverage if you transfer jobs or are unemployed. When you purchase insurance, check to see if it pays benefits in addition to other coverage you may have.
With so many types of insurance, deciding which works best for you can be confusing. Read on to learn more about what types of supplemental life insurance are available and which types of coverage fit your needs. A future newsletter issue will focus on supplemental Disability and AD&D coverage.
If you have bills, a car loan, mortgage, dependents and were to die suddenly, what kind of financial hardship would result? Would your spouse or children be left without basic support? Would your burial costs impose undue financial hardship on others? As uncomfortable as it is to think about these questions, they are at the core of sound life insurance decisions. If there are people who depend on you, life insurance may be valuable financial protection.
Life insurance provides a certain amount of money (called the “death benefit”) upon your death to someone you select as your beneficiary. In return for this protection, you pay the insurance company periodic payments, known as “premiums.” The premium amount generally depends on factors such as the amount of coverage you selected (how much money your dependents should receive), your age, gender, medical history and whether you intend to build up cash value in your policy. Some policies may require a medical exam.
Two of the most common types of life insurance are term life and whole life. Depending on you, and your family’s needs, term life and whole life can provide the financial security you need.
You pay a premium for coverage over a specific period of time (a term) of one, five or ten years—or to a specific age, such as 70. At the end of your term, your policy ends. Death benefits are paid only if you die within that term of years.
Typically, you may renew your policy at the end of each term (your beginning age will determine how much your premiums will be each month). These term insurance policies are “renewable” for one or more additional terms even if your health has changed. Each time you renew the policy for a new term, premiums will be higher due to your new age.
Some term insurance policies are also “convertible.” This means that before the end of the term period, you may trade the term policy for a whole life policy even if you are not in good health. Premiums for the new whole life policy can be quite a bit higher than you were paying for the term insurance.
Because the premiums for term insurance increase with age, young and middle-aged people benefit greatly from a term life policy’s economical rates. Term life could be a great choice for those in need of additional protection—such as families with young children, mortgages, college tuition costs and other large bills.