If you have life insurance coverage via your employer, chances are that’s a group life insurance policy. Group life insurance covers a specific group of people such as employees of a certain company, members of an organization or association, or members of a labor union. Typically, everyone in the group is covered, so long as they opt in and pay their portion of the premium (if any). Employees usually do not have to take a medical exam or respond to a medical questionnaire to qualify.
Depending on your situation, group life insurance may be sufficient for your needs. But for mny people, group coverage is not enough. Let’s look at some options if you’re in search of additional coverage.
Why look for more coverage?
Group life insurance is typically offered at low or no cost, which can make it appealing. So, why would you want additional coverage? First, coverage usually ends when you leave the group. This means that if you quit or retire, you no longer have the financial safety net offered by life insurance. Group policies also typically only offer death benefit up to one or two times your salary, which likely isn’t enough. For these reasons, many people covered by group life also seek additional coverage.
Term life insurance
Term life insurance provides coverage for a specific period of time, usually 10, 15, 20, or 30 years. Term life typically offers the most death benefit at the lowest cost. Term life can be a smart choice for people on a budget who need coverage during a vulnerable period. For example, for a couple who just took out a mortgage, a 30-year policy can offer coverage during the mortgage repayment period. This can ensure that, if one partner passed away unexpectedly, the other would still be able to keep paying the mortgage. Many new parents also opt for term life insurance. 20-year term life insurance can cover the family until the children grow into independent adults.
Permanent life insurance
A permanent life insurance policy provides coverage for your entire life, as long as you pay the required premiums. Two common types of permanent life insurance are universal life insurance and whole life insurance. Both types of policies come with a guaranteed death benefit. They also come with a cash value component that builds over time, among other perks. Policyholders can borrow against the cash value for any reason.
Choosing the right life insurance policy for you
Which life insurance policy you choose depends on your financial situation and preferences. No matter which type of life insurance you choose, it’s important to understand the details of your policy. You may want to speak to an insurance agent or financial advisor for further guidance. With proper planning and the right coverage, you can ensure that your loved ones are taken care of.
Source: iQuanti
The primary purpose of permanent life insurance is to provide a death benefit. Using permanent life insurance accumulated value to supplement retirement income will reduce the death benefit and may affect other aspects of the policy.
