Understanding Supplemental Group Term Life Insurance

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What is Supplemental Group Life Insurance?

If you have a group policy with your employer, supplemental group term insurance can be added. Group coverage can be less comprehensive than you might like, as policies are designed to benefit the entire group. You may have special needs as an individual who has a family. A supplemental term policy is a smart decision if you are in this situation.

Supplemental term insurance is available to employees who perform all their regular duties on a fully-time basis. Check with your employer, as some companies define “full-time” as working for at least 17.5 hours per week while others require that you work 40 hour weeks. You must be already covered by your company’s basic term life insurance policy. If you purchase a policy on your own, spouses and dependent children may also be covered.

What are the benefits of adding a supplement?

Supplemental term life insurance offers a few benefits. First, you will be able to waive your premium. The insurance company will keep your policy in force until you turn 65 years old if you are completely disabled before you reach 65. Your disability must be sustained for at least nine consecutive months before benefits can be granted. Your insurance company will stop collecting any premium payments if your disability persists indefinitely. A person is “totally disabled” if they are unable to work in any job that pays wages due to injury or illness. Annual proof of continued disability must be provided.

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The Accelerated Living benefit is another benefit of a supplemental life insurance policy. A person may be eligible for a percentage of their basic and supplemental life insurance policies if they are diagnosed with terminal illness. The benefit is typically paid as a lump sum. Your carrier may be able to help you determine if the benefit is available. It is typically 50% of the active value or $50,000.00. The accelerated living benefits are available to employees and their spouses, but not to children. Most cases of coverage are portable, which means that you can take your coverage with your if you move, change your job, or retire.

Only the standard waiver of benefits payment is allowed if the employee/spouse/dependents dies within the first two-year period after the policy was in effect. You should check with your carrier because in some states, this exclusion applies to both insane and sane individuals. In others, it only applies to the sane.

How age affects your policy

Although premiums for supplemental life insurance are relatively low at just a few dollars per monthly, they are affected by the age of the policyholder. The premium is determined by your age, and can increase at different stages. For details, you would need to speak with your carrier. For supplemental term life insurance policies, age 70 is the defining moment.

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Your coverage begins at 70 and is reduced to 65% from the original certificate face value.

Your coverage begins at 75 and is reduced to 45% from the original certificate face value.

Your coverage begins at age 80 and is reduced by 30% from the original certificate face value.

Keep in mind that spouse coverage ends at 70. Your spouse can choose to change their individual coverage to a life insurance policy. You can also convert your dependents’ policies to a term life insurance policy after they become dependent. They may be eligible for term life insurance policies up to $25,000.00 and $50,000.00.