Are all life insurance policies the same?

There are different types of life insurance policies, and they fall into two main categories: term and permanent.

Term policies– Like the name implies are good for a set period (term) of time. On the open market, these policies are usually purchased in 20- or 30-year term periods, and those provided by employers are based on term of employment. Term policies are generally marketed as an affordable option to protect your beneficiary in the event you pass away unexpected; if you outlive the term of the policy, the policy does not pay a benefit. They typically provide a large amount of coverage for relatively low cost. The University provides benefit eligible full-time employees, a term life policy at no cost to the employee. Additionally, employee’s may purchase supplemental term life insurance for themselves and/or their eligible dependents.

Permanent policies– Permanent policies, also known as universal or whole life policies are as the name implies permanent. Meaning, if premiums are paid, the policy will pay benefits upon death of the insured or pay the benefit when max age limit is reached (typically age 100), regardless of age of policy or active employment. Permanent policies are often utilized to diversify life insurance coverage and for final expense planning. Permanent policies premiums are “locked” upon enrollment and do not increase. Policies gain cash value that can be utilized for loans or to pay up the policy. The University offers a Universal life insurance policy option through Allstate.

What about Accidental Death and Dismemberment (AD&D)?

AD&D is not a life insurance policy. An AD&D policy does offer a benefit if a covered insured dies in relation to a covered Accident. However, unlike life insurance, the death benefit must be related to a covered accident. The policy will not make a payment if an insured dies related to an illness. AD&D policies also provide a lump sum benefit for specific loss, such as loss of sight/hearing, or dismemberment of appendages related to a covered accident. AD&D is provided by the University to full-time benefit eligible employees in an amount equal to your basic life insurance.

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