You probably need life insurance, or might in the future, if you have any of the following: spouse, children, house, partner, practice loan, student loan, real estate, building, equipment loan, buy-sell agreement. So it’s a good idea to familiarize yourself with the basics.
There are two basic forms of life insurance: group and individual; and there are two types of coverage: term and permanent.
Forms of Life Insurance
Group coverage is usually offered by an entity such as an employer, association, or affinity group. The entity is the owner of the group life contract, so the policy may be cancelled or non-renewed by either the entity (policyholder) or the insurance company. You may or may not be able to convert this type of coverage if you leave the entity.
Individual coverage is owned by you, and you have a contract with the insurance company. Other than in the case of insolvency by the company, you can keep the policy as long as you continue to pay the premium.
Types of Coverage
Term life insurance offers you protection for a guaranteed amount of premium for a guaranteed amount of time. The longer the guarantee period, the higher the premium will be. The younger and healthier you are at the time of purchase, the lower the premium will be.
Term insurance guarantee periods range from 1 year (ART) to 30 years, and the guarantee periods are typically offered in five-year increments. At the end of the guarantee period, you have the option to continue the coverage—but at a substantially higher premium.
Most term policies allow you to convert to a permanent life policy up to a certain age, regardless of a change in health. Term life policies do not have cash value.
Permanent insurance is designed to provide you with protection for life with a guaranteed level premium. Part of your premium goes to build cash value, which will accumulate over time. This cash value can be used to automatically purchase additional insurance, pay future premiums; or it can be taken out as a loan.
The most common types of permanent insurance are: whole life, universal life, variable life and equity indexed life. These plans offer an assortment of options including paid-up, fixed, or flexible premiums. Permanent insurance premiums are higher than those of a term life policy because of the longer guarantees and cash value build up.
Most life insurance policies also offer optional riders at additional cost. Some of the more common riders include: waiver of premium for disability, return of premium, accelerated death benefits, and long term care benefits. Each of the riders is meant to address an issue that might come up over the lifetime of the policy, and should at least be considered.
Starting July 2017, group term life insurance and group long term disability will be offered to eligible TDA members through TDA Financial Services Insurance Program.
A special open enrollment period will launch the programs, and be held July 17–August 31, 2017. During this period, TDA members can enroll—no medical questions asked.
Learn more about what these plans offer through educational webinars held during open enrollment on: July 25, August 15 and 22; 12:30 pm–1 pm CST. Register at tdagroupbenefits.com
If you’d like more information or to discuss the insurance options available, please contact TDA Financial Services Insurance Program at 800-677-8644 or visit tdamemberinsure.com