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Choosing the right type and amount of life insurance is an important financial decision that can affect your whole family. A common type of coverage that may be available as a workplace benefit for free or at a low cost is basic group life insurance offered by your employer.
Life insurance coverage through an employer was available to 57% of private industry workers in March 2022, according to the National Compensation Survey by the U.S. Bureau of Labor Statistics.
The industry research group LIMRA found that fewer than half of those without life insurance coverage surveyed in the 2022 Insurance Barometer Study said they felt financially secure. The same survey found that 68% of respondents who did have life insurance said they felt financially secure.
But to really understand the role life insurance plays in a family’s financial security, you need to dig a little deeper and examine the details of the coverage you’re getting.
Let’s run through the basics of the group coverage that may be available through your employer’s plan, identify its limitations, and review the options you have for supplementing this coverage to safeguard the financial situation of your dependents.
Whether the amount of coverage you’re able to get is flat or based on your annual salary, you may want to consider more than what’s offered by your employer’s plan, especially if you have loved ones to support.
If your life insurance is going to help provide your beneficiaries with enough coverage, you’ll want to review your family’s needs. Items to consider are your current debt, such as a mortgage and credit cards; your family’s living expenses for several years; and long-term financial goals like retirement or college education.
One of the primary purposes of group life insurance is to provide additional financial security in the form of a death benefit to the employee’s family and loved ones if the insured passes away. Since most employer-offered group life insurance policies are a type of life insurance called term life insurance, they don’t have cash value and you can’t borrow against them the way you may be able to with a permanent life insurance policy.
Because employers are effectively buying in bulk, they’re often able to get good rates on basic group life insurance for their organization. This helps keep the cost to employees low (in some cases, the premiums may even be paid by the employer), and that can make group life insurance a very valuable benefit, even when it doesn’t fully cover your needs.
You may be able to purchase additional life insurance through your employer, but it’s likely the convenience may be offset by rates higher than you might qualify for as an individual.
AAA Life Insurance Company offers a needs analysis calculator to help determine the amount of coverage that is right for you and your loved ones.
Evaluate your needsIf your employer offers group life insurance to employees, getting coverage can be as simple as signing up during employee onboarding (most paperwork is part of the hiring process) or signing up during an open enrollment period if you’ve been with the company for a while. There’s usually no medical exam required (unless you want to buy extra group life), which makes it an attractive option if you have health issues that prevent you from qualifying for individual life insurance. You may even be able to pay your group life insurance premiums through a payroll deduction.
With many group policies, your employer-provided life insurance ends when you stop working for the company. With others, you may be able to keep coverage, but your premiums could increase. Even if you don’t leave the company, there’s also a possibility your employer could change the option provided to employees, leaving you with less coverage than you’re used to.
Group life insurance is often used to provide additional coverage beyond an individual life insurance policy that employees obtain on their own. That’s right—you can have more than one life insurance policy at the same time.
If you decide that the life insurance through your employer doesn’t fully meet your needs, consider getting an individual life insurance policy as well. Individual coverage can be customized to fit your exact needs. You’ll be able to apply for as much as you need (subject to the underwriting guidelines of the insurance company) at a rate that’s based on your situation, and it can last as long as you need it to. Evaluating your needs and adjusting coverage during the course of your life can be a smart response to your changing requirements for coverage.
Life insurance
Speak to a Life Specialist at AAA about adding an individual policy to your coverage plan.
This information is being provided for general informational purposes only. The Auto Club Group does not assume any liability in connection with providing this information.
Life insurance underwritten and annuities offered by AAA Life Insurance Company, Livonia, Michigan. AAA Life Insurance Company is licensed in all states except NY. CA Certificate of Authority #07861. Products and their features may not be available in all states.
AAA Life and its agents do not provide legal, tax or financial advice. Please consult your professional advisor prior to the purchase of any policy or contract.
This is a summary of product provisions and does not contain all of the benefits and exclusions. For complete terms of the insurance coverage or annuity, please contact your agent or refer to the policy/contract.
Annuities - LA
Annuities are not short-term products. During the surrender charge period, withdrawals exceeding 10% will be subject to a surrender charge that may be higher than fees associated with other types of financial products and may reduce principal. Withdrawals prior to 59½ may be subject to IRS penalties, separate from the annuity’s schedule of surrender charges.
EliteGuarantee Deferred Annuity - LAEG Contract Form Series: ICC11-4101/DA-4101 (In OR: ICC11-4101)
Platinum Bonus Annuity - LAPB Contract Form Series: ICC11-4111/DA-4111 (In OR: ICC11-4111)
Guaranteed Income Annuity - LAGI Contract Form Series: ICC14-4120/SPIA-4120 (In OR: ICC14-4120)
The payout amount you will receive is based on your individual circumstances, the options you select at the time of application and your initial premium payment.
Term Life Insurance - LT
Premiums are guaranteed. They are level for the term period and increase annually thereafter. Any sample premiums are examples only and may vary based on your personal health history and underwriting guidelines. The answers provided to the health questions are used to determine eligibility for coverage. Not all applicants will qualify. Product and its features may not be available in all states. Coverage ends at age 95.
If insured is diagnosed with a terminal illness that will cause death in 12 mos. or less, up to 50% of the total benefit can be applied for, and used as insured chooses. The remaining benefit payable at death will be reduced by the Accelerated Death Benefit paid and any accrued and unpaid interest (8% annual interest rate applies). Receipt of Accelerated Death Benefits may affect eligibility for public assistance programs and may be taxable. Please consult the appropriate social service agency and seek the advice of tax counsel before applying for these funds. The Accelerated Death Benefit is not available if the terminal illness results from an intentionally self-inflicted injury. This benefit may not be available in all states.
ExpressTerm - LTE Policy Form Series: ICC19-1601/1601 (In OR: 1CC19-1601)
Traditional Term - LTT Policy Form Series: ICC19-1801/1801 (In OR: ICC19-1801)
Group Direct Term Policy Form Series: GT8200
Individual Direct Term Policy Form Series: ICC16-1501
Universal Life Insurance – LULG
Health history, underwriting guidelines and the answers provided to health questions are used to determine approval for coverage. Not all applicants will qualify. Rates may vary.
Lifetime Universal Life Insurance - LUL Health history, underwriting guidelines and the answers provided to health questions are used to determine approval for coverage. Not all applicants will qualify. Rates may vary.
Policy Form Series: ICC19-4701/4701 (In OR: ICC19-4701)
If insured is diagnosed with a terminal illness that will cause death in 12 mos. or less, up to 50% of the total benefit can be applied for, and used as insured chooses. The remaining benefit payable at death will be reduced by the Accelerated Death Benefit paid and any accrued and unpaid interest (7% annual interest rate applies). Receipt of Accelerated Death Benefits may affect eligibility for public assistance programs and may be taxable. Please consult the appropriate social service agency and seek the advice of tax counsel before applying for these funds. The Accelerated Death Benefit is not available if the terminal illness results from an intentionally self-inflicted injury. This benefit may not be available in all states.
Accumulator Universal Life Insurance - LULA Health history, underwriting guidelines and the answers provided to health questions are used to determine approval for coverage. Not all applicants will qualify. Rates may vary.
Policy Form Series: ICC19-3701/3701 (In OR: ICC19-3701)
If insured is diagnosed with a terminal illness that will cause death in 12 mos. or less, up to 50% of the total benefit can be applied for, and used as insured chooses. The remaining benefit payable at death will be reduced by the Accelerated Death Benefit paid and any accrued and unpaid interest (5% annual interest rate applies). Receipt of Accelerated Death Benefits may affect eligibility for public assistance programs and may be taxable. Please consult the appropriate social service agency and seek the advice of tax counsel before applying for these funds. The Accelerated Death Benefit is not available if the terminal illness results from an intentionally self-inflicted injury. This benefit may not be available in all states.
Whole Life Insurance
Whole Life Insurance (for coverage amounts of $30,000 or more) - LWL Policy Form Series: ICC18-5601/5601 (In OR: ICC18-5601)
Health history, underwriting guidelines and the answers provided to health questions are used to determine approval for coverage. Not all applicants will qualify. Rates may vary.
If insured is diagnosed with a terminal illness that will cause death in 12 mos. or less, up to 50% of the total benefit can be applied for, and used as insured chooses. The remaining benefit payable at death will be reduced by the Accelerated Death Benefit paid and any accrued and unpaid interest (8% annual interest rate applies). Receipt of Accelerated Death Benefits may affect eligibility for public assistance programs and may be taxable. Please consult the appropriate social service agency and seek the advice of tax counsel before applying for these funds. The Accelerated Death Benefit is not available if the terminal illness results from an intentionally self-inflicted injury. This benefit may not be available in all states.
Rapid Issue Whole Life Insurance (for coverage amounts of $25,000 or less) - LRIWL Policy Form Series ICC20-7001/7001 (In OR: ICC20-7001)
Responses to the application will be used to determine approval for coverage. Not all applicants will qualify.
This Whole Life policy is referred to as graded benefit whole life insurance. If you suffer a non-accidental death within the first two years of coverage, your beneficiaries will get 100% of the base premiums you paid, plus 35%. After two years, the total amount of your coverage is paid for death due to any cause.
After the first two years of coverage, if insured is diagnosed with a terminal illness that will cause death in 12 mos. or less, up to 50% of the total benefit can be applied for, and used as insured chooses. The remaining benefit payable at death will be reduced by the Accelerated Death Benefit paid and any accrued and unpaid interest (8% annual interest rate applies). Receipt of Accelerated Death Benefits may affect eligibility for public assistance programs and may be taxable. Please consult the appropriate social service agency and seek the advice of tax counsel before applying for these funds. The Accelerated Death Benefit is not available if the terminal illness results from an intentionally self-inflicted injury. This benefit may not be available in all states.
Guaranteed Issue Whole Life Insurance - LGIWL Policy Form Series: ICC16-6301/GWL6301 (In OR: ICC16-6301)
The maximum amount of Guaranteed Issue Whole Life insurance coverage per insured is $25,000.00. Subject to age requirements and policy limit restrictions.
This Guaranteed Issue Whole Life policy is referred to as graded benefit whole life insurance. If you suffer a non-accidental death within the first two years of coverage, your beneficiaries will get 100% of the level monthly premiums you paid, plus 30%. After two years, the total amount of your coverage is paid for death due to any cause.
If you are a California resident 65 years of age or older, we are required to advise you of the following. The sale or liquidation of any stock, bond, IRA, certificate of deposit, mutual fund, annuity, or other asset to fund the purchase of this product may have tax consequences, early withdrawal penalties, or other costs or penalties as a result of the sale or liquidation. You may wish to consult independent legal or financial advice before selling or liquidating any assets and prior to the purchase of any life or annuity products being solicited, offered for sale, or sold
ALAN-29546-624-XX
