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Life Insurance 101

Whether you’re just diving in or need a refresher, we have helpful guides to get through the basics and help you understand how life insurance can play a part in your financial planning.

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I Have Life Insurance Through My Job. Isn’t That Enough?

There are two ways people typically get life insurance coverage: They get it through work as part of their employee benefits, or they buy it themselves. Some people decide to have both employer-provided coverage and an individual policy to meet all their needs. How you get life insurance often determines the key features of your life insurance coverage. Ahead, we explain the details of both and what to consider as you think through your own coverage.

If you have life insurance through work...

You likely have group life insurance. Group life insurance policies, as the name implies, cover a group of people, such as employees at a workplace. These policies are commonly offered by employers to their employees as a benefit or perk, typically at little or no cost to the employee. You often automatically qualify for a certain amount of coverage for a group policy, so it’s a simple way to get life insurance.

A group life insurance policy is set up as a contract between the group and the insurance company. The group policy provides a payment to people you list as beneficiaries if you die while the policy is active. The amount the insurance company will pay is referred to as your “death benefit” or "coverage amount." It’s important to know that group policies are often not “portable” which means you can’t take them with you if you leave your job. Overall, it’s generally a good idea to take advantage of life insurance offered through work.

Why buy individual life insurance?

Individual life insurance policies provide coverage on the life of one person. They are set up as a contract between the individual and the insurance company. To get an individual life insurance policy, you often have to qualify for coverage. It could be as simple as answering a few questions, or you may need to answer more extensive questions about your finances and health. In some instances, a health exam may be required to get approved.

People often seek out individual life insurance policies to get coverage beyond what they have through work.

Another reason some people may seek individual coverage is because as mentioned earlier, you cannot easily take your group coverage with you if you leave your job. And, individual life insurance is often less expensive than buying additional coverage through your work plan.

How to buy individual life insurance.

Traditionally, you could only buy life insurance through an insurance producer or a financial professional. Today, you can also buy it directly online or over the phone.

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