Student Term Life insurance

Posted: Wed Aug 04, 2010 09:11 pm Post Subject:

It's a program offered through the insurance subsidy of the AMA. You get either $25k or $50k in db coverage for either 10 or 20 bucks per year. Not a terrible deal as far as benefits and numbers go, but limited nontheless as all group policies go. Additionally, if you have more than $50k in student loans it doesn't really cut it.

You won't like find a private plan that is cheaper than this, but you will find a private plan that is more comprehensive. There's a trade off between flexibility and perhaps even comprehensiveness for cheaper premiums relative to certain features and benefits. You'll have to ask yourself which is more important.

Posted: Thu Aug 05, 2010 05:18 am Post Subject:

There's a trade off between flexibility and perhaps even comprehensiveness for cheaper premiums relative to certain features and benefits.

Posted: Fri Aug 06, 2010 06:10 am Post Subject:

Death benefit amount is at the top of the list. An individual policy compared to a group policy allows you to incorporate features that are important to you -- like a waiver of disability rider or a long term care rider -- and the choice of what type of policy you have.

Group policies are predominantly term life, the majority of individual life policies are some form of cash value, which has advantages and disadvantages compared to term life. And some group policies may even limit death benefit claims to "on the job" death. Die at home, or on the ski slopes, or while scuba diving, and the policy may not pay.

What more would you like to know?

Posted: Fri Aug 06, 2010 08:29 am Post Subject:

I understand what you mean by a choice of policy, also I've heard about the long term care rider. But what's this 'waiver of disability'? I haven't heard of it before.

Posted: Fri Aug 06, 2010 04:24 pm Post Subject:

Sometimes called "Waiver of Premium, Disability", it's an add-on that one pays for which suspends the premium payments if the insured becomes totally disabled (usually the "any occupation" definition), and remains disabled after 6 months. No premium payments are due after 6 months for the duration of the disability, to as late as age 65, and the insurer may refund the first six months of premiums once the waiver kicks in (the insured must continue paying premiums until the rider takes effect).

Since most disabilities are short-lived, six months is a reasonable amount of time to establish a longer-term disability. If the person recovers, then they start paying premiums again. They must agree to and cooperate with the insurer's requests to be examined (at company expense) to determine the status of their disability, but not more often than twice a year.

Although anyone under age 50-55 can apply for it at the time the policy is applied for (but not everyone will be approved for the rider), it is usually recommended for self-employed persons, and persons working in high-risk occupations. The cost varies from company to company, but typically adds only a few dollars per month compared to the base premium.

Posted: Sat Aug 07, 2010 09:07 am Post Subject:

Max, you're truly helpful. Perhaps you're the right person to clarify some my long term doubts. Does short-term disability signify any disability that gets cured within 6 months? Can it be termed as partial disability? Or is it different than partial disability?

Posted: Sat Aug 07, 2010 04:31 pm Post Subject:

Typically, a disability policy, short- or long-term, requires total disability to pay a benefit. Following a period of total disability, a policy may also pay a benefit for a residual or partial disability. Normally, at least to start a claim, partial disability is not covered in an individual disability policy. If the discussion turns to Workers' Compensation, the matter is different.

A disability is defined either as "own occupation" or "any occupation", depending on the language in the contract. An own occupation policy is more expensive because if a disability prevents the insured from performing the essential duties of their profession, they will be considered disabled, even if they may be able to do some other sort of work. Under the "any occupation" definition, although a person might not be able to do their own work, if there is something else they can do that would pay them about the same amount of income as the benefit in the policy, they will probably not be "disabled" in order to collect a benefit.

"Short-term disability" is determined not by the disability itself, but by the length of the benefit. Although others may disagree, short-term disability policies may pay benefits for as long as two years before the benefit ends. They can also require that the insured be disabled for up to several months before the benefit begins (14-90 days are not uncommon "elimination" or waiting periods). After a short-term disability policy ends, a long-term disability policy could begin to pay its benefit, which could last to age 65, or possibly for life, if longer (depends on the contract).

The cost of all disability income policies are based on three primary factors, in addition to one's age and occupational and/or avocational risks (hobbies), how soon you want the benefit to begin (elimination period), how much you want it to pay (benefit amount), and how long you want it to pay for (benefit duration). The sooner you want it, the more you want, and the longer you want it for, the more expensive it will be.

Posted: Sun Aug 08, 2010 04:59 pm Post Subject:

Typically, a disability policy, short- or long-term, requires total disability to pay a benefit. Following a period of total disability, a policy may also pay a benefit for a residual or partial disability. Normally, at least to start a claim, partial disability is not covered in an individual disability policy.

The cost of all disability income policies are based on three primary factors, in addition to one's age and occupational and/or avocational risks (hobbies), how soon you want the benefit to begin (elimination period), how much you want it to pay (benefit amount), and how long you want it to pay for (benefit duration).