» Individual Life Insurance

I have Group Life insurance at work, isn’t that enough?

Steven Bedgood — Sat, 13 Feb 2010 15:50:41 +0000

Though group life insurance is a great deal, is it really all the insurance coverage that you need?

In most cases your employer owns the group life insurance policy, and you will either receive it as an employee benefit or you can purchase it through your company’s benefits plan voluntarily. If it is a benefit, it typically equates to one full year’s salary that is paid out to your beneficiaries at the time of death. Smaller companies may offer a set, face amount payout, depending on your position at the company. Larger companies usually offer better death benefits, like up to three times your salary, in the event of your death. Smaller businesses are more apt to offer smaller plans due to limited funds.

Group life insurance that is offered on a voluntary basis is typically more extensive than if it’s given as a benefit. Depending on what kind of policy you have, your spouse and children may be covered as well. The size of your death benefit can vary, and at some places, there is a maximum amount of $1 million that can be collected by the beneficiary at the time of death. Some employers even go as far as to offer a whole life insurance policy, giving employees permanent life insurance coverage, even after they leave or retire. The main difference between individual life insurance rates and group rates is that the premiums in group life insurance rates go up every five years (or so), because the risk of death associated with age increases.

Why group life insurance is so “cheap”
The cost of insuring a group of people, rather than an individual person, is cheaper because the rate is based on the overall risk of the group. The insurer typically assumes that not all people who are insured will remain with the company until they retire, which in turn means a shorter life insurance term. Also, the likelihood of the entire group dying is far less likely than if you base it off of one person.

The cost to insure a $100,000 life insurance policy under a universal life group policy would only be $5 per month, or $70 per year. This is because generally, for a person in good health working a normal job, the cost per $1,000 worth of life insurance coverage is only 5 cents.

No medical exams required
Unless a severe health problem is listed in the questionnaire when applying for group life insurance, no medical exam will be required. In laymen’s terms, you will qualify for life insurance, regardless of any outstanding medical conditions, making it a guaranteed issue.

If a health problem is found, a medical exam, including blood and urine specimens, will be required before you can be approved for life insurance. Figures will be listed and compared in table format, comparing the employee population of males to females, smokers to non-smokers, and the nature of the work being done at the company and by the candidate. High-risk jobs, such as construction or carpentry, will likely be more expensive than low-risk jobs, like working in an office or a bank.

Added Bonus
Group life insurance is a great added bonus for you; however, it should not be used instead of individual life insurance. With group life insurance, the coverage offered is not always enough to take care of your beneficiaries, especially if you are the main bread winner in the family. Also, you may lose your group life insurance coverage once you leave your current job, and if you developed a health condition while working there, it may be more difficult to get affordable life insurance rates at the next place you go to.

However, the option to keep your life insurance after your leave or retire may be available, but it will probably cost you fifteen to 30 percent more in insurance premiums. In the event your employer switches life insurance plans or cancels the one you have, you will no longer be covered.

The downsides of group life insurance coverage

You may lose life insurance coverage if you change jobs
Limited life insurance coverage options and features to select from
Group policies are more standard than individual life insurance plans

If you are interested in receiving a life insurance quote, log on to www.muskegonlifeinsurance.com or call me at (231) 744-9099. We can help you evaluate the best life insurance plan for you and your family.

Do I Need More Than Just the Group Life Insurance I have through work?

Steven Bedgood — Sun, 25 Oct 2009 05:31:39 +0000

Though group life insurance is a great deal, is it really all the insurance coverage that you need?

In most cases your employer owns the group life insurance policy, and you will either receive it as an employee benefit or you can purchase it through your company’s benefits plan voluntarily. If it is a benefit, it typically equates to one full year’s salary or less that is paid out to your beneficiaries at the time of death. Smaller companies may offer a set, face amount payout, depending on your position at the company. Larger companies usually offer better death benefits, like up to three times your salary, in the event of your death. Smaller businesses are more apt to offer smaller plans due to limited funds.

However, the option to keep your life insurance after your leave or retire may be available, but it will probably cost you 10 to 60 percent more in insurance premiums. In the event your employer switches life insurance plans or cancels the one you have, you will no longer be covered.

The downsides of group life insurance coverage

You may lose life insurance coverage if you change jobs
Limited life insurance coverage options and features to select from
Group policies are more standard than individual life insurance plans

If you are interested in receiving a life insurance quote, log on to www.MuskegonLifeInsurance.com. Or just give me a call at (231) 744-9099. We will be able to help you find the best life insurance plan for you and your family.

Why you should choose your life insurance beneficiary carefully

Steven Bedgood — Mon, 19 Oct 2009 02:04:35 +0000

Life insurance helps protect your family’s financial security. Some people have coverage through work, while others buy individual life insurance policies.

Regardless of what type of life insurance you have, there’s one small detail that, if overlooked, can cause one big headache: naming a beneficiary of your policy.

A beneficiary is the person who receives the proceeds of a life insurance policy when the insured person dies. If you select your spouse as the policy beneficiary, he or she will be paid a benefit at your death. Besides individuals, beneficiaries can be a company, charitable organization or legal entity called a “trust”.

Selecting a beneficiary enables you to take advantage of the numerous benefits life insurance can provide your family. Unfortunately, many people decide hastily or even forget to select a beneficiary.

Avoid These Traps

Not naming a beneficiary – or doing so improperly – can rob loved ones of intended benefits, cause legal complications or create unexpected tax bills. For example, naming a spouse as beneficiary – a common practice – may be unwise if he or she is unprepared or unable due to illness to take over the family finances following your death.

What if your spouse is the beneficiary and then you divorce? If you forget to change the beneficiary to your new spouse, all the proceeds may go – against your wishes – to your former spouse.

Appointing young children as beneficiaries is also risky. A court-appointed legal guardian will hold and manage the money until they reach 18 or 21 years old, depending on state law. This process generally involves legal formalities, delays and expenses. As a parent, you may be uncomfortable knowing that once your children reach the age of majority, they will be entitled to receive the full proceeds to spend as they wish.

If you forget to name a beneficiary, life insurance proceeds go into your estate and can be subject to estate taxes. One way to address potential problems is by designating a trust as beneficiary of your life insurance policy.

When filling out a beneficiary form, make sure you precisely indicate the beneficiary’s name, social security number, and relationship to you. If you name “my spouse” as the beneficiary and then divorce and remarry, a court may have to decide which spouse you meant.

Because naming a beneficiary is so important, it’s a good idea to ask a knowledgeable insurance or legal advisor for help with the decision.

I’ve teamed up with Linda Kaare at Parmenter O’Toole here in Muskegon, Mi. She’s an excellent Estate Planning Attorney. You can contact her at lsk@parmenterlaw.com.

For the Life Insurance, please contact me at my Farm Bureau Insurance office located at 1500 Whitehall Rd, Muskegon, Mi. 49445. For an appointment, call me at (231) 744-9099.