insurance programs types

The benefits of permanent life insurance, compulsory entire life insurance, accidental death, and dismemberment insurance, and long and short-term disability insurance are described and discussed in this article. These forms of life insurance may be incorporated into an organization's benefit plan program and aimed at different job categories in order to motivate them. The key areas of contrast and benefit are the length of the cover, the expense, the number of persons it protects, the payback time, and the versatility it provides in terms of accommodating annexed or appended covers. The paper overs these elements on these insurance plans and explain what makes them appropriate for various scenarios and age groups such as the youth, aged and people with disabilities.





















Types of Insurance Programs

Insurance is a general term referring to a mechanism of transferring risk through financial compensation either fully or partially to the loss or damages that are caused in the event of risk occurrence. There are various types of insurance programs available in an organization compensation and benefits package. Some are mandatory as stipulate by the law while others are optional and used by various corporations as part of incentive schemes to boost employee morale and thus ultimately end up with quality service delivery. However, this paper looks at the following types: term life insurance, universal whole life insurance, accidental death and dismemberment and finally long and short-term disability insurance. They are analyzed in the subsequent section in terms of their definitions and their advantages. It is important that an individual and organization find out what package is appropriate to them and then implement it so that they can get the maximum possible yield for the arrangement. The appropriateness is in terms of age, payback period, the number of dependents covered, duration and costs associated with the package as opposed to the ability of the potential policyholder. The subsequent section addresses these elements.

Term life insurance refers to policy cover where the holder is compensated in the event that he/ she dies or retires within the specified duration. It pays for the policy face amount in case of death of the insured within the term period but will not pay if the insured outlives it (Baldwin, 2002). The premium cost in this package increases as the age of the insured advances. Term life insurance is commonly used as insurance cover for loan repayments and after death liabilities like the estate taxes. It differs from the permanent forms of the life insurance, such as universal life, whole life, and universal variable life insurance which guarantee to cover for fixed premiums in the whole individual's lifetime. Term life insurance does not accumulate the cash value, unlike the other life insurance types. The premiums paid are utilized in covering the insurance protection cost hence no refund is expected at the end of the term period.

Term life insurance is advantageous because in life insurance it is the simplest and cheapest compared to other types of insurance. It gives death protection with payments at fixed rates within a specified limited period. Meaning, if the insured dies within the specified time period as per the terms, the beneficiaries will be paid according to the face value of the policy by the insurer. The terms of insurance in team life insurance makes it cheap and affordable to many who are young in age. This makes it a good choice for short-term goals, for example, till a child clears university.

Universal whole life insurance is a permanent policy consisting of universal and whole life insurance, it is designed to last for the entire lifetime without expiry period so long as the premium is paid as required. It accumulates cash value with time to enable borrowing against tax-free which makes its premium higher in comparison with the others. However, there is a slight difference in terms of policies between universal life and whole life insurance. The latter offers fixed premium where the insured pays the same amount every year for their coverage while Universal have flexible premiums that allow for adjustments yearly by assessing the cash value of the policy.

Universal whole life insurance has a variety of benefits such as having several of options of payments ranging, flexibility in changing the death benefits and accumulation of cash value with time which enables the insured to skip the payment of premium if there is enough cash value for the monthly expenses. Whole life insurance allows accumulation of cash value with time and a death benefit with a fixed policy. It has tax- deferred on the growth of cash value just as in universal life. Additionally, it allows loans and withdrawals against its policy (Levitt & Dubner, 2011). Finally, the cover makes it easier for the insured to budget and plan for consistent and regular monthly premium payments.

Accidental Death and Dismemberment insurance compensates an individual in the event that they lose body parts or die in an accident. From this perspective, it gives employees an added advantage on financial security in case of tragic and sudden circumstances. It is an invaluable low-cost addition to the present benefits package. Accidental Death and Dismemberment policy covers the face amount for the policy, death benefits are usually granted to beneficiaries in case the insured dies accidentally. Under this policy accidental death is death that occurs due to unforeseen circumstances not related to the body either by illness or physical condition of the insurer. It does not cover any claims of illegal activities and death from bodily malfunctions. In addition to that, the policy can provide some scheduled benefit or death benefit.

The advantage is that the company pays low premiums for coverage because the accident fatalities are rare, this makes it an attractive benefit for most employees, even if it is offered on a voluntary basis. It is also important for employees who do jobs that involve some sort of danger such as heavy construction and nuclear testing where they can be dismembered accidentally or more likely to die at work due to mishaps. It provides double indemnity or twice death benefits to the beneficiaries in addition to term life insurance policy (Thompson, 2014).

Disability insurance is a type of insurance policy which covers the lost income for individuals who cannot be able to work because of some injuries and illnesses. Some policies of disability insurance offer coverage to workers for short durations like a month while some provide stable coverage benefits for a long period of time like a decade. Deciding on whether to go for the long term, short term or both will depend on individual's needs, budget and expectations. Short term disability insurance is intended to offer coverage to individuals that cannot do work for shorter durations. The policy normally covers three to six months. The short-term policies are cheap and usually affordable. Furthermore, they begin their benefits immediately, mostly within the two weeks when the insured becomes disabled. They pay more at the first times of benefit payments, almost equal to the worker's salary. Long term disability insurance gives a monthly payment in the case of disability lasting for more than six months and some will give the benefits to the policy holder until they attain the age of 75 and above.

The most important advantage is the peace of mind it grants the policyholder with the knowledge that up to 70 percent of the benefit will be paid as long as the period of the disability lasts. It also gives additional options such as hospital stay periods and added supplemental insurance for increased monthly payments. Due to these merits and demerits, long-term policy of disability insurance offers the best options for individuals with savings (Butler, 2009).

Conclusion

There are several types of insurance covers that have different policies with varying terms and conditions that distinguish them in terms of application and payments. It is the distinctions that make the various insurance policies different from one another and enable them to be categorized in terms of advantages and applicability. Each package has its strengths and weaknesses a factor that makes them suitable for different situations. The advantages are mainly in the form of duration, price, payback period, and fitness for a specific case. It is important that an organization comes up with a clear policy for determining the type of package that it offers its employees and whether these types of packages are suitable for the workforce. As a matter of fact, the organization must consider a flexible bundle that allows for adjustment to fit the workforce requirements. For example, when the majority of the staff are youth, an elderly oriented policy would be ineffective and where the organization only has the elderly, a youth-oriented package would be irrelevant. As such, the elderly must be matched with the correct package as well as the youth. A mismatch of the packages would prove futile and potentially detrimental to the organization's health in terms of cash.































References

Baldwin, B. (2002). The new life insurance investment advisor. 1st ed. New York: McGraw-Hill.

Butler, K. H. (2009). Live your life insurance. CreateSpace Independent Publishing Platform.

Levitt, S. D., & Dubner, S. J. (2011). Superfreakonomics: Global cooling, patriotic prostitutes, and why suicide bombers should buy life insurance. New York: William Morrow Paperbacks.

Thompson, J. (2014). Money. Wealth. Life insurance.: How the wealthy use life insurance as a tax-free personal bank to supercharge their savings. CreateSpace Independent Publishing Platform.