An additional life insurance policy is a way to include more coverage into the team life insurance coverage you currently have through your company. Seems like a wise move, right? Wait a moment.
Extra coverage might seem like a great idea. However, look deeper, and you will find additional life insurance policies that are both long in cost and short in value.
We understand all types of life insurance policies can seem a little confusing at first. But when you break it, it’s simple! We’ll take you through the ins and outs of both the team and additional life insurance policies. After that we will help you find the best way to get the protection your life insurance policy needs.
Let’s dive in!
Maybe you currently have team coverage, or maybe you’re new to team life and extra lives. In either case, you should know these plans have a tendency to work together.
You can get a team life plan with no additional coverage (and you should if it’s free to you as a worker benefit), but you can usually only have an add-on if you currently have a team. Get it? Okay!
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One of the most likely times that you become aware of a team life insurance policy is when you are starting a new job. Many companies offer it as a free worker’s benefit. As long as it’s free, you’re crazy to skip this—because you don’t want a free benefit that could one day help their family?
So far, very good. But where do additional life insurance policies come in? We really think it shouldn’t go anywhere. But you’ll often find it an option when you hear about the benefits of your boss’s team life. The company understands that team life plans are minimal in payouts. So they will offer an additional life insurance policy in the same talk. The thought was, Why not use the pay cut benefits and get a bigger plan?
Stop right there! Also combined with team coverage, an additional life insurance policy will never give you coverage that is as large or reliable as a cheap call life plan. Let’s see why:
To sum up what it seems to prefer to win with extra teams and lives: Take whatever free team coverage you have to offer, but skip anything that’s bound to come out of your pocket. Take those savings and get a 15-20 year calling life plan that is worth 10-12 times your annual income.
Postpone. Is there more than one additional type of life insurance policy? There must be! Let’s look at some of the common types.
This is one of the most basic types, as we mentioned earlier. This is a way to strengthen your team’s life plan from your company. You don’t need this, even if you’re taking advantage of the free team coverage. Instead, put that pay reduction onto a call life insurance policy.
Now, we’re getting into the tricky—and sometimes tempting—sales tricks that are used to market extra lives. Many companies offer life insurance policies for your spouse or housing companion if they are not currently covered by any life insurance policies.
Sounds beautiful and thoughtful, right? While it may sound easy to register them at the same time as you, there is a catch. Since this is a plan that goes hand in hand with your team’s life insurance policy, the payouts are almost never likely to be high enough to alter their earnings. Also if they were a stay-at-home mom and dad it wouldn’t be enough.
Just like the other variations, additional partner coverage is an unnecessary waste of money. Don’t get me wrong—your partner’s life is precious. And they do need a life insurance policy. But a reduction in pay related to worker benefits is not a wise service. Your partner needs their own calling life plan to last as long as you both have dependents. This is not only less expensive, but also more reliable compared to plans related to tasks that may change next week.
The insure-your-child variation of an additional life insurance policy can be hard to resist. Besides, they are your little ones! You have to vouch for them, right? We understand the essence of this push, but it misses the big picture purpose of life insurance policies. Kids usually don’t have an income to convert, so this is another psychological selling trick. If you really want to protect your children—and we believe you do—make sure you and your spouse have a call life insurance policy that can change your income while you’re away.
We smell a psychological ploy! Accidental death and dismemberment (AD&D) protects you if you lose a limb (the cutting component) or die “accidentally”—which, we last examined, coincided with death in the routine sense of the word.
If you currently have life insurance coverage that covers any type of death you can afford, why would you need additional coverage for “accidental” deaths?
Tip: you don’t. Not only are these plans cheap, they are also useless due to a long list of issues that insurance companies say they won’t pay for. Buyers beware: The bad guys remain in the information, and the AD&D plans are full of that information.
If considering your loved ones when trying to make choices about a life insurance policy doesn’t make you psychological, thinking about those who are grieving when planning your funeral services certainly will. But don’t let your feelings override your activities!
Interment insurance is another plan you can do without. It is designed to be spent on your final expenses when you die, and is usually targeted at older individuals who want to take the pressure of funeral services off their families. But here’s the bottom line about dying: In the end, everyone does it. So as much as financial resources go, it should be easy to prepare.
The average funeral service costs just under $8,000.1 But instead of paying a regular monthly payment for funeral insurance coverage to cover that cost, you can save, say, $50 each month and spend it somewhere (like shared money) that gets you approx. 10-12% return annually.
If you start at 30, you have over $1 million by the time you turn 78. That’s enough for a funeral service that deserves a star!
The reality is, large emergency money and the correct amount of call life insurance policies should cover the cost of death and funeral service costs, hands down. So no need to bother with different plans.
No one should buy a life insurance policy through their company. But as mentioned earlier, you can go ahead and sign up for a basic (and free) team life insurance policy through your company, as avoiding it will certainly mean giving away free money. (That must be stupid!) Did we mention that the keyword here is free? For neither are the basics worth registering unless they are provided to you at no charge.
Whatever you do, don’t spend on additional life insurance policies.
If you are most likely to get an allowance for a life insurance policy, your best option is to purchase a call life insurance policy through an off-the-job insurance representative. You will save money on costs this way, compared to supplementing through your company.
This personal call life insurance policy will not only give you more death benefits, it will stick to you through whatever job you have.
And remember to get some long-term decline insurance too (more on this soon), which will cover lost income if you are injured or disabled and unable to work.
Riders are additional coverage or benefits included in the insurance package at an additional cost. After you sign up for a team life insurance policy at work, the insurance partner may try to sell these riders for your life insurance policy as well. Raider warning—you don’t need any of these either!
Life insurance policies exist to offer your loved ones when you die. It’s a big job, but a big call life insurance policy plan outweighs the challenge. We can never say enough—we recommend buying a call life insurance policy that is 15-20 years in size and covers 10-12 times your income.
Do you need a past call life insurance policy? Okay! You should always have long term loss insurance. This is as important as getting a call life insurance policy.
How much long term damage insurance do you need? We say get as much coverage as possible—about 60-70% of your earnings. This is the amount of your income that you earn on a typical day (after you take into account your tax obligations, Social Security, and various other points that come from your paycheck).