Understanding Supplemental Group Term Life Insurance
Below is a MRR and PLR article in category Finance -> subcategory Wealth Building.
Understanding Supplemental Group Term Life Insurance
What is Supplemental Group Term Life Insurance?
If you’re already covered under a group life insurance policy through your employer but find it lacking, supplemental group term life insurance might be the answer. Group policies are generally designed to cover the needs of the entire group, which may not align with your personal family needs. In such cases, purchasing a supplemental term life policy can be a wise move.
Eligibility
To be eligible for supplemental term life insurance, you must be a full-time employee covered under your employer's basic group life insurance policy. The definition of full-time can vary by company, sometimes starting at 17.5 hours per week up to 40 hours. Your spouse and dependent children can also be covered if you purchase a policy.
Benefits of Adding Supplemental Coverage
Waiver of Premium
One major benefit is the waiver of premium. Should you become fully disabled before age 65, your policy remains active without requiring further premium payments, provided your disability lasts at least nine consecutive months. Proof of ongoing disability must be provided annually.
Accelerated Living Benefit
Another advantage is the Accelerated Living Benefit. If you’re diagnosed with a terminal illness and have 12 months or less to live, you may receive a lump sum of up to 50% of your combined basic and supplemental policies, or $50,000, whichever is less. Employees and their spouses are eligible for this benefit, but dependent children are not. Most policies are also portable, so you can keep your coverage if you retire or change jobs.
Suicide Exclusion
Be aware that there is an exclusion for suicides occurring within the first two years of the policy. This applies differently in various states, so check your specific policy details.
Impact of Age on Your Policy
While premiums for supplemental term life insurance are generally modest, they do increase with age. At certain milestones, your coverage value decreases:
- At age 70, coverage reduces to 65%.
- At age 75, it reduces to 45%.
- At age 80, it further reduces to 30%.
Spousal coverage ends at age 70, but your spouse can convert their coverage to an individual policy if needed. Dependents also have the option to convert their policies once their dependent status ends, obtaining life insurance of $25,000 or $50,000.
Conclusion
Supplemental group term life insurance can provide crucial additional coverage up to $270,000. Ensure your family’s financial security by considering this valuable benefit.
You can find the original non-AI version of this article here: Understanding Supplemental Group Term Life Insurance.
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