What Small Businesses Should Know About Accidental Death & Dismemberment Insurance
Ben Galbreath - Producer
Accidental death and dismemberment insurance is insurance coverage similar to that of life insurance, and is commonly used as a supplement to a life insurance policy. It covers an employee in the event of an accidental death, or an unforeseen accident that results in the loss or function of a body part (e.g., arms, legs, eyesight, speech, hearing). AD&D does not cover deaths caused by existing medical conditions.
Producer Ben Galbreath discusses what small businesses should know about accidental death & dismemberment insurance:
What is accidental death and dismemberment insurance (AD&D)?
Accidental Death & Dismemberment insurance is a good coverage to be added to a benefits portfolio. This coverage is on a very limited form, meaning it will only pay a benefit due to an accident. Definition of an “accident” is an unforeseen incident that happens unexpectedly and unintentionally. The coverage is triggered only by an accident.
Do you have to offer AD&D to employees?
AD&D is an optional benefit that can be added to an employer’s benefit portfolio. If the benefit is offered to one employee, it will need to be offered to all. The employees will have the option to take the coverage or not. An employer does not have to offer the AD&D if they don’t want to. If health coverage is offered, AD&D is usually a rider included on the coverage. It can also be offered individually.
How does offering AD&D to employees benefit employers?
Employers offering AD&D benefits is a way of broadening health benefits to make their business more attractive to prospective employees. With the growing struggle to recruit and retain quality employees, this could attract those employees.
How does being offered AD&D benefit employees?
The coverage benefits employees to some extent – if an employee has an accidental dismemberment, it would help with the medical bills and rehabilitation. In terms of accidental death, the death benefit would be paid out to the employee’s family.
What does AD&D cover?
AD&D is only triggered in the event of an accident, meaning unintentional death or dismemberment of the insured. Death is self-explanatory and the death benefit would be paid out. When it comes to dismemberment coverage, this would apply to loss, or the loss of use, of body parts or functions (e.g., limbs, speech, eyesight, hearing).
Anything else a small business owner should know about AD&D?
AD&D is usually added to a group health policy for a very minimal cost, but it can also be offered as standalone coverage. Additionally, AD&D can be added to a life policy or group life policy.
Small business owners need to be very careful when offering this coverage due to its limited coverage for unlikely events. It is supplemental life insurance and not an acceptable replacement for term or whole life insurance. This is why it’s usually added to group health or life coverage.
Generally speaking, I don’t advise small business owners to offer AD&D coverage on its own. This type of coverage can be offered in a better supplemental benefit programs. Many accident policies, critical illness and others, offer similar coverage. The best advice would be to speak with a supplemental benefits provider to understand the different options that are available. Working with an independent broker can help build a strong benefits package that could be more cost effective for the employer and employee.
Questions about AD&D insurance, or group health or life coverage? Contact Wallace & Turner at (937) 324-8492 in Springfield, (937) 652-8492 in Urbana, or info@wtins.com.
Don't Overlook Two Critical Steps When Purchasing Life Insurance
Colleen Corrigan, Life & Health Agent
Having life insurance coverage is one of the best ways to protect your loved ones and is considered to be the cornerstone of sound financial planning. Life & Health Agent Colleen Corrigan examines two situations you may not have considered when purchasing a policy.
Why a non-breadwinner partner in a household should get life insurance
Life insurance should be reviewed and purchased for both the primary breadwinner and secondary income earners within a family. There are misconceptions that if anything happens to the non-breadwinner, there would be minimal financial impact because the income is lower than the higher earning spouse.
As a family reviews their financial planning, they should include life insurance into this equation. Consider the following during the review:
Life Insurance will assist the surviving spouse with household expenses and upkeep. Undoubtedly, the loss of the non-breadwinner will mean hiring someone to assist with household duties or even childcare. Life insurance can soften the financial strain of the loss of support within the household
Life insurance can be used to support your family’s educational needs. Money can be set aside for future tuition, transportation to school or private tutors.
Life insurance will alleviate any burden left behind due to the passing of the non-breadwinner. Often, there are medical bills, burial costs and other expenses that the family must manage. It can be difficult to deal with the pain of losing a family member while managing bills associated with the loss.
The gift of life insurance can also be used as inheritance to your spouse and/or your children. Life insurance is the final act of caring for your family and securing their future.
Why the life insurance provided by your employer may not be enough
There are two primary issues with life insurance programs offered by employers. First, the life insurance offered is lower cost or no-cost to employees. However, many plans do not allow employees to purchase the amount needed to cover the financial needs of their family. These programs also do not permit adding spousal life insurance or enough life insurance coverage for the spouse. Secondly, this coverage may not be permanent. Life insurance programs offered to employees are not portable. If an employee leaves his/her employer, the coverage will need to be converted, which can be more costly than the premiums paid during his/her employment.
In moments of grief, the last thing you want is to leave your loved ones with debt, so take a close look at whether the life insurance you are offered through work is the best way to provide for your family. It is important to partner with a broker who will assist you with your financial planning to protect your assets and make sure your family can continue the lifestyle they are used to and achieve the goals planned.
Questions about life insurance? Contact Wallace & Turner at (937) 324-8492 in Springfield, (937) 652-8492 in Urbana, or info@wtins.com.
How Does Term Life Insurance Work?
Ben Galbreath
Term life insurance is a type of life insurance policy that protects your loved ones in case you pass away while the policy is in effect for a limited time, for example, 30 years. Producer Ben Galbreath discusses how term life insurance works and what you should consider when purchasing coverage.
Why is buying term life insurance important?
Buying term insurance has many benefits. The top two benefits to an individual are amount of coverage and cost; the cost for term coverage is usually very attractive for the amount of coverage you can buy. When you are starting out in life on your own, you will potentially start making decisions with much higher price tags. These price tags come with conditions or agreements. For example, many individuals do not have the cash on hand to put it all down on a home, condo or other residence. Mortgages come into play. Even if you could buy a home outright, you will incur many costs to maintain the home.
Purchasing term life coverage would help you to withstand the time it would take to build your cash back up and protect your family from unforeseen death of the main income or the secondary income. In the instance of your death, the life coverage would be there for your living family members, and then they have options instead of struggling financially and incurring additional debt. The options can range from taking time off to mourn, paying off debt, going back to school, job training, building a new way of life and childcare if you have kids.
What factors affect the cost of term life insurance?
The easy factors to establish are the amount of coverage and how long you would like the coverage. However, it gets more complicated when you start the application process. Many factors come into play to establish your rate of insurance. For example, your auto insurance is rated on your specific vehicle and driving experience as well as recent auto claims.
When it comes to life insurance, the company looks at your morbidity table. A morbidity table is a statistical table that shows the proportion of people that are expected to become sick or injured at each age (Collins Dictionary). Term life insurance is not just calculated on your age and sex; insurance carriers will take many different factors into consideration, including height, weight, blood work, medical history, pre-existing conditions, past medical documents and others.
How should you decide between term life and whole life insurance?
If you were to poll different advisors/life agents this exact question, you would receive many differing views when it comes to term or whole life insurance. Term insurance and whole life coverage serve two very different objectives.
Term, as the name suggests, is coverage that you purchase at an agreed value (death benefit) offered by the company to you for a set number of years (the term) at a set cost. Whole life insures you for as long as you pay the payments. Whole life has many other benefits to it like cash value, growth (depending to the type decline) or other options. Term coverage costs are much lower than whole life coverage in comparison to the same individual. Term rates are established for only a set number of years and at the end of those years, the policy/coverage ends with no cash value to you.
When you visit your life specialist, they need to look out for your best interest, and how you would like the coverage to benefit you/your family and work alongside your investment plan. Advisors need to evaluate your whole portfolio and create a package best suited for how you invest and what you are looking for at the time of purchasing life insurance. Most individuals choose term coverage due to the cost for the amount of coverage you can buy. Most debt has a term so many individuals purchase the life coverage for the term to cover the debt taken on. Whole life is used more frequently when it comes to business settings, e.g. buy sell agreements, key man coverage and many other benefits for upper management. It is sold as a benefit to the individual.
Questions about life insurance? Contact Wallace & Turner at (937) 324-8492 in Springfield, (937) 652-8492 in Urbana, or info@wtins.com.