Supplemental Individual Life Insurance
Company-paid life insurance plans offer employees good basic protection that provide meaningful death benefits to their beneficiaries. This benefit is typically in the form of term insurance with coverage at least one times annual base salary up to some predetermined maximum. Employees have the ability to top this up by purchasing optional term life insurance for themselves, their spouses, and children.
Companies today are also making available a voluntary add-on to term insurance in the form of individual life insurance policies. They differ from term insurance in that these policies are permanent in nature; they protect the policy holder through their lifetime; and the policies have a cash build-up mechanism that can be accessed by the policy holder. Whole life and Universal life are the two typical products in this area and both contain many of the following:
- Provide a death benefit through retirement, guaranteed minimum cash value, and investment build-up
- Investment earnings are tax deferred
- Discounted, level premiums throughout the lifetime of the policy
- Guaranteed, renewable protection that cannot be reduced
- Individually owned, portable policies