Life Insurance Awareness Month: Which Plan Is Right For You?

Sep 5, 2023 | Life Insurance, Term Life, Universal Life, Whole Life

September marks Life Insurance Awareness Month, and we would like to celebrate this month with you! Life insurance is one of the most important benefits you can enroll in, but navigating the different types of life insurance can be overwhelming and confusing.

Think of it as buying your first car: you want to ensure you get the best one for you and your needs, but you might be unsure where to start.

Understanding and navigating life insurance ownership can be tricky. Let us break down the various forms of life insurance protection for you.

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Basic Life Insurance

More than 50% of Americans think that life insurance is more expensive than it is.1 Basic Life Insurance is here to prove them wrong. Basic Life Insurance is a group-rated and employer-provided benefit in which the employer pays the premium, meaning it is of no cost to the employee.

Because the employer pays the premium, they are the policyholders of this form of life insurance. Because of this, employee participants will receive a certificate of insurance. Additionally, the employee is the only eligible individual who is allowed to be covered.

Just like any form of life insurance, Basic Life Insurance requires that you select a beneficiary when electing the benefit. A beneficiary is a person you’d like to leave a cash benefit with when you pass away. The beneficiary can be your spouse, child, or even a friend.

You must select your beneficiary immediately upon electing the benefit. You can have Basic Life Insurance in addition to other forms of life insurance your employer offers.

A woman is consulting with an older couple.

Voluntary Term Life Insurance

Voluntary Term Life Insurance is another form of group-rated insurance, but the employee pays the premium through payroll deductions. This form of coverage is especially helpful, as it can extend to your spouse and children.  The rates for VTL are based on group activity and are “age banded”, which means your rates can change as your age increases.

One unique feature of Voluntary Life Insurance is that it is portable or convertible. Portable VTL means that if you were to leave your job, you could still maintain coverage. While you will keep the same group rate, you will have to pay for the benefit directly instead of it continuing to be taken out of your paycheck.

If the VTL is convertible instead, the policy will convert to an individual policy with different rates should you leave your job. Another unique feature of VTL is that life services such as financial planning resources are available to you when you elect this benefit.

Individual/Permanent Life Insurance

Permanent Life Insurance differs from the other two forms of life insurance as it is individual instead of a group. The owner of the insurance is the policyholder. While it’s a no-brainer to elect group life insurance since it’s cheap, it’s also important to purchase an individual policy (especially because it’s tax-free when the death benefit is paid out). There are three different individual policies to know about:

Whole Life Insurance

This is typically the most expensive, but it does offer the highest cash value in addition to the death payout. It also lasts for the longest amount of time, typically 120 years. Whether you pass away at 30 years old or 100 years old, your beneficiary will receive the same amount. The premium is based on the age you were at the time of purchase and remains the same for as long as you have it. Additionally, this life insurance policy never expires.

Universal Life Insurance

The cost for this insurance is average, and the same goes for the cash value. Just like Whole Life, the coverage of Universal Life lasts for the entirety of the insured’s life. This form of permanent life insurance is flexible with its pricing. Unlike Whole Life, you can adjust your premium price and death benefit. If you want to adjust your benefits so that your minimum premium payment needed to keep the policy is lower, your insurance company will allow you to. The policy can suit your current financial situation.

Level Term Life Insurance

This is the cheapest form of individual insurance but does not offer a cash value. This policy only lasts for a specific term; the terms are 10, 20, or 30 years. Once the term is up, the policy will expire as it will need to be changed to fit your new life insurance needs.

The truth of the matter is that final costs can be expensive. We’ve all seen families scrambling to raise funds on crowdfunding platforms to pay for a member’s sudden death, especially if the primary wage earner died. Luckily, you can prevent your family from being in a sudden financial bind by having a life insurance plan. It’s equally as important to make sure your life insurance policy best suits the needs of you and your loved ones. Double check the plan(s) you are enrolled in and contact a broker for specific plan information. Make smart insurance choices by securing your financial future and financial security. Minimize your personal financial responsibility when it comes to funeral costs. Enroll in a life insurance policy today.








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