Individual Life and Term Insurance
Individual life insurance is a form of insurance where you pay an amount of money to an insurance company in return for coverage on your own life. Usually, this coverage is for a specific amount of time which varies by company. Group life insurance may at times be a bit less costly but there are several restrictions and downsides to a whole group life policy which you should be fully aware of before deciding to purchase one.
The first limitation of individual life insurance is that it will only cover you if you are in good health at the time of the purchase. The good news is that at any age you may need additional coverage to the coverage does not have to be for the entire term. In some cases, depending on your age, you may be able to purchase additional coverage as an individual policy. However, it is typically going to cost you quite a bit more than a policy designed for a whole family.
Another limitation of individual life insurance plans is that they are typically only available to employees of the company you purchase them through. If you work for an employer and he provides this type of coverage, then you are typically covered for the period that he allows it. To check if your employer offers this type of coverage, call your human resources department. If your employer does not offer this type of benefit, you will need to look for an individual insurer. Be sure to ask about the cost of individual insurance plans because they are usually more expensive than those designed for a company.
Another disadvantage of individual life insurance policies is that they have relatively high premiums. This is due primarily to the fact that the policy is purchased directly from the insurer and you as the policyholder is responsible for paying most (if not all) of the premiums. This means that you will need to save up sufficient money in order to cover these premiums, which could prove to be very difficult.
The reason why premiums on individual life insurance policies are higher is because of the higher risk of dying while you are still employed. This can be illustrated with a car accident. People who are involved in car accidents are often deemed to be greater risks than people who do not get involved in car accidents. So, they are viewed as more of a risk when it comes to buying coverage. Insurance companies charge higher premiums.
The advantage of an individual life insurance plan is that the premiums paid by you are tax deductible. You pay these premiums directly to the insurer. You typically get a statement from the insurer that details the benefits you will receive during your lifetime. Once you reach a certain age, most states require that you obtain coverage from an approved insurer or you will face fines. However, you may also want to check with your employer if he will allow you to buy into this type of plan through his company.
If you are a senior citizen, you may need some form of assistance when you retire. You can opt for an individual life and term insurance plan. This will entail paying a higher premium but will give you better benefits in the end. However, you may need to take into account that in the event of your death, your beneficiaries will only receive the proceeds from the individual life and term insurance policy.
There are several ways that an employer can offer group insurance to their employees. Most employers offer some type of benefit but usually it is either a pension or a health plan that is offered to their employees. They may have offered the option of individual insurance but it is not as common. So, if you are planning to buy into an individual life insurance plan, you will probably have to look at your employer first. If you are still employed and still have a nice benefits package, you may consider shopping around for better rates.