The question is: what is optional term life insurance? Well, this is additional coverage that the policyholder can acquire through your employer. An optional term life insurance is above and over the basic coverage that an employee can get through a benefits plan.
Typically, the employer will be paying for the premium of basic life insurance coverage. But the employee himself will be the one to pay for the total premium of an optional term life insurance.
A term life insurance covers a specific period, and it has no cash value attached to its account. Unlike permanent life insurance, you cannot take out load against your policy or withdraw its cash value. Read further to find out more about optional term life insurance and term life policies in general.
3 Advantages Of An Optional Term Life Insurance
So, what is optional term life insurance? Purchasing an optional term life insurance comes with advantages. Below are some of the most common advantages which push an employee to purchase additional coverage like this.
#1. A medical exam is not needed
When signing up for optional term life insurance, you need not answer some medical questions. Likewise, a medical exam is not necessary for the period of enrollment.
This type of insurance is allowing you to purchase additional coverage at a group rate. Furthermore, you may choose to keep your group policy even if you decide to quit your job. Not only that, but you can also convert your term coverage into a permanent life individual policy.
A term life insurance has a particular provision that allows you to change your insurance, referred to as convertibility. This way, you can have a permanent life policy without getting a medical exam again. The convertibility feature is an offer by most, if not all, insurance companies.
It is convenient to buy an optional term life insurance since you need not sort the various choices. Just ensure to read your policy thoroughly. Also, evaluate the insurance provided carefully.
A Quick Tip
But it would help if you did not allow the convenience alone to sway you. It is still advisable to review life insurance quotes to have other alternatives. In some cases, you can get a policy at a better rate if you apply alone and provide medical information. This is especially true for healthy and young people.
Not because the employer provides coverage, you can assume that your needs are met. It is best to talk to an independent agent as he can help plan the coverage you can afford while considering your needs. They will also help in determining which product will suit you best, given your financial goal.
How Does A Term Life Insurance Works?
Essentially, term life is a contract or agreement between the insurance provider and the policy owner. The one owning the policy should sign to pay for the premium within the specified term. In contrast, the insurance company agrees to pay out a certain amount of death benefit to the beneficiary when the insured person dies.
Below are the things that you need to go through when acquiring a term life insurance policy.
#1. Application Process
You do not get the benefit automatically. The insurance provider first needs to assess the risk that comes in insuring you during the underwriting process. Typically, you are required to undergo a medical exam. You will also be asked about your lifestyle, occupation, among others.
#2. Choosing the term length
You should ask yourself if how long do you need the coverage. In case you have kids, the term should be long enough, typically up until they can move out of your house for college.
Although a longer-term would mean that the payments made each month with having to go on longer, it is worth it compared to shorter-term life since no one knows what may happen in the future.
#3. Deciding on the amount of death benefit
The coverage must be sufficient to sustain the needs of your surviving independents if you can no longer support them. The amount of coverage that you need commonly costs lesser than expected. One survey shows that about 44% of millennials thought that purchasing a life insurance policy is more expensive than it actually is.
#4. Naming beneficiaries
It would be best if you decided on who will be receiving the benefits upon your death. It does not have to be one person only. For instance, you can give one half of it to your partner and the rest will be divided your children.
Although commonly, the beneficiaries are your family, it does not have to be. The policyholder may choose to name a friend or even a charity as a beneficiary. They will be entitled to receive the benefits.
It’s A Wrap!
Now that you know what is optional term life insurance, you can consider getting this additional coverage for yourself. Several advantages come to having this type of insurance policy.