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Summary
A company may offer life or disability insurance as part of its benefit package. If so, employer-provided policies combined with individual policies can provide a cost-effective and smart solution.
Employer-provided life insurance tends to have reasonable rates, generous underwriting requirements, added security, and no individual rate increases. Individual life insurance includes permanent and term life insurance.
For long-term protection, traditional whole life insurance is probably the best option. Basic types of permanent life insurance include whole life, universal life, and variable life.
Term life insurance offers death benefit coverage for a certain amount of time. Different types of term life insurance include level term life, decreasing term life, renewable, and convertible.
In the event of death, family members could receive Social Security survivor benefits if the deceased worked, paid Social Security taxes, and earned enough credits. There is a direct correlation between average lifetime earnings and the amount a family gets in survivor benefits. The higher the income of the deceased, the more they will receive in benefits.
Disability insurance replaces income by providing monthly benefits in the event that a person becomes disabled and can no longer work. There are two main categories of disability insurance: short-term and long-term. Short-term coverage is usually employer-provided, but long-term coverage can be provided on a group or individual basis.
There are benefits to employer-provided disability insurance. Group coverage is considerably cheaper than individual coverage. Depending on an employer's policy, it may cover a portion or your entire disability insurance premium.
Individual long-term disability insurance is expensive, but it can be well worth the expense. Unfortunately, working in a dangerous occupation or having a medical condition, may make it difficult to qualify for individual disability insurance. If you can find and qualify for this type of policy, you may consider yourself lucky.
Social Security provides retirement benefits and disability income. Unfortunately, Social Security's disability qualifications are strict, and qualification is not easy. Social Security doesn't pay disability benefits for short-term or partial disability, only total disability.
An employer is typically required by law to provide workers' compensation to all employees for any work-related injuries or illnesses. State laws mandate different amounts and lengths of coverage, so it's wise to become familiar with your state laws on this subject.