How to use Term Life Insurance as Supplemental Life Insurance
Many jobs offer Group Life Insurance at little to no cost for employees as part of a benefits package. Many of these plans fail to provide enough coverage, which is why they offer additional coverage, known as Supplemental Life Insurance.
However, buying supplemental coverage through your group plan could be expensive. Getting a separate Term Life policy might be a better option for you. Learn more about Supplemental and Term Life Insurance to help you find the right life insurance coverage.
What is Group Life Insurance?
Group Life Insurance is a life insurance policy in which one contract covers a group of people, such as a group plan for employees of a company.
Group Term Life Insurance tends to be a cost-effective way to get covered, but coverage amounts are often limited. For example, you may only be offered coverage that mirrors your annual salary.
What is Supplemental Life Insurance and How Does it Work?
Supplemental Life Insurance is additional coverage you can purchase on top of your basic Group Life coverage. It allows you to add extra coverage to your group plan. You're responsible for the supplemental coverage premiums, but you probably won't need to take a medical exam to get coverage.
Supplemental Group Life Insurance is often more expensive than purchasing individual insurance outside of work. You'll also have to deal with restrictions on coverage amounts or term lengths. Since most supplemental policies don't require an exam up to a certain amount, you might want to get supplemental coverage if you're facing health issues.
How Term Life Insurance can Supplement Your Group Life Insurance
Due to its flexibility and affordable rates, Term Life Insurance is a great option to supplement your Group Life Insurance plan with additional coverage. With a separate term insurance policy as a personal supplement to your group coverage, you will not have any restrictions or cost limitations set by the supplemental life insurance offered through your Group plan.
What is Term Life Insurance?
Term Life Insurance is a flexible and customizable option that provides coverage for a certain period of time. This period is known as the "term" of the policy. If you pass away during the term, your beneficiaries receive the death benefit, or coverage amount, of the policy. Term coverage is less expensive than other types of life insurance, making it an affordable option for supplemental coverage.
How does Term Life Insurance work? Your term insurance policy works as life insurance coverage for a specific number of years. When you apply for your policy, you'll choose the length of the term and how much coverage you want. You can usually choose to have fixed premiums for the entire term of the policy.
When your term is over, your term policy expires. This means you're no longer covered, but the good news is you can often renew your policy or convert it to permanent life insurance.
Benefits of Term Life Insurance Policies vs. Supplemental Life Insurance Policies
For most people, the benefits of a Term Life policy outweigh the benefits of employer-provided Supplemental Life Insurance. Term Life offers:
- Term insurances allows you to customize your policy with flexible coverage amounts and term lengths.
- Cheaper costs than supplemental policies. You'll also be able to shop around to find the coverage and price that fits your needs.
- Insurance that's not tied to your employment. If you leave your job, you could lose your Group and Supplemental Insurance.
Should You Get Supplemental Life Insurance or a Term Life Insurance Policy?
Buying life insurance is an important decision. Be sure to carefully weigh the pros and cons of both supplemental coverage and a separate Term Life Insurance policy when choosing your coverage. You should start by using a Term Life Insurance calculator to see how much coverage you need. This can help you determine if additional group coverage or a separate policy is right for you.
Still not sure? Get in touch with an AIG Direct Life Insurance agent today for answers to your individual questions about supplementing group insurance with a term policy.