Term Life Insurance as Part of Health Plan By Dennis Jarvis At Isnare.com Ezine Articles

So you're going through the wonderful process of completing an individual/family health insurance application and you come to an option for term life insurance. There's a tendency to just mark yes to avoid the hassles of another application and to stop the nagging inner-voice that tells you to get life insurance. Let's take a look and see if selecting life insurance through your health insurance carrier makes sense.

The information here reflects individual/family health insurance. If term life insurance is offered through you employer, we have provided more information at our individual versus group life insurance article.

A trend over the last decade or so is for health insurance carriers to offer term life insurance as an option. The coverage usually comes in smaller amounts than what you can find through our term life insurance quoting engine. The usually amounts might look something like $15K, $30K or $50K. Rarely will you find amounts that are higher for individual/family health coverage. The benefit of jointly applying for term life insurance through health insurance is that it's all one application...one which you're competing any way for the health coverage. It's this simplicity that encourages most people to just mark "yes" next to this term life option. There's a real cost to doing this so let's investigate further.

The key point with life insurance is cost per dollar of coverage. If you really want life insurance protection then buying your own term life insurance plan will be the much better value. Let's take an actual example of a 30 year male in California. Through our quoting engine the average rate for 10 years of $50K term life is $6/monthly. Through a major health insurance carrier, the term life rate would be $11. That's almost double for the cost per dollar of term life insurance. You are going to pay significantly for the convenience factor. This is only half the story. With a stand-alone life insurance policy, your rate is locked in based on the age at the time of enrollment. With life through your health plan, the rate may increase as you get older and we know that age significantly affects your term life rate.

Another key point with life insurance through your health carrier is that it may be dependent on you keeping the health coverage in force. If you cancel the health coverage, you may not be able to keep the life insurance and that defeats the purpose of life insurance to begin with. People are constantly going in and out of the job market. The other more important issue is the amount of life insurance you are able to purchase. $50K will not address most life insurance needs. As we discussed in our related article, most life insurance needs revolve around income replacement over long periods of time and $50K will only go so far. This amount is more likely suitable for final expense issues such as funeral costs, debts incurred, taxes, and estate settlement. In order to have larger amounts, you're better off purchasing your own term life policy which you can keep regardless of the status of your health coverage.

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