Essentially, life insurance is a financial contract that pays benefits to a beneficiary after the death of an insured person. This person, the insured, and the insurance policy holder agrees to certain terms and conditions that trigger payment of the policy. Other conditions such as a terminal illness might lead to a payout before the insured’s, often to cover medical care expenses.
Selecting an insurance policy typically depends on several factors. Most people purchase life insurance to provide financially for their surviving relatives after their death. Depending on the type of policy, some people may use the value of a life insurance policy to pay off debts or long-term medical care. Regardless of the reason for purchasing a life insurance policy, there are many considerations before selecting a provider.
There are many life insurance providers throughout the country that offers various types of plans. Several providers, such as Aetna, Inc., only offer corporate-sponsored life insurance plans. Coverage with Aetna is only obtained through life insurance policies that a person’s employer provides. Others, such as New York Life Insurance Company offer both corporate-sponsored plans and individual plans. A person has the option of purchasing an individual policy from New York Life without including coverage from an employer.
In addition to the general difference between Aetna and New York Life, there are other differences to consider.
Corporate-sponsored life insurance policies are also called group coverage or group insurance. The preferences of the employer with the options available through Aetna determine the eligibility requirements and type of policy offered to employees.
Employers may offer life insurance policies for:
- Full-time or part-time employees
- Dependant coverage for spouse and/or children
A detail of what the employer offers is typically found in the plan summary. Additionally, the plan summary outlines exclusions and limitations to benefits.
Types of Aetna, Inc. Life Insurance Policies
Aetna offers numerous types of group policies plans.
Basic Life Insurance
Aetna offers a basic employer-sponsored life insurance plan to employees that pay a cash benefit to one or more beneficiaries. Typically, the cash benefit equals the annual salary of employees covered by the plan. Basic life insurance is usually based on an employee’s annual earnings. Some employers provide this coverage at little or no cost to employees.
Supplemental Life Insurance
Supplemental life insurance is coverage in addition to the basic plan. Just like the basic plan, supplemental life pays a cash benefit to one or more beneficiaries when an employee dies. This payment is determined by a coverage amount. Actual payment might be limited when combined with the basic plan.
Plan Options Applicable for Basic and Supplemental Life
Several plan options exist for basic and supplemental life insurances.
- Accelerated death benefit – policy payment if employee becomes terminally ill
- Conversion – option to continue coverage after employment termination from retirement, eligible class or leaving the company
- Premium waiver – continued coverage without payments if employee becomes disabled
Accidental Death and Personal Loss (AD&PL)
Accidental death typically offers a benefit to the family if an employee dies on-the-job. Benefits are also payable if the employee is injured while working. Several factors determine the amount of AD&PL payment and may vary among employer plans.
Qualifying injuries also vary based on plan description and may include:
- Loss of hearing, sight, speech or limbs
- Third degree burns
Plan benefit options for AD&PL may include:
- Child care – expense paid when a covered parent dies
- Educational – pays higher education expenses for employee’s child and employment training for the surviving spouse
- Repatriation of remains – assistance with the expense of returning deceased employee’s body to a mortuary if death occurs 200 miles or more from home
New York Life Insurance Company
New York Life has two employer-sponsored insurance products. Both are universal life plans, which provide permanent protection and gives employees access to tax-deferred cash values.
- Corporate Sponsored – guaranteed four percent interest rate. Premiums are flexible throughout the insurance contract.
- CorpExec – Variable II-V or VI for non-qualified executive benefit programs. Both programs include a range of investment options.
Individual Life Insurance Products
New York Life also offers life insurance plans for individuals to purchase without an employer plan. Variable Universal Life (VUL) insurance through New York Life provides a death benefit to beneficiaries while allowing the insured to make investments. Typically, these investments could provide a greater cash value than is available in most fixed life insurance plans.
Covered individuals can select investment options to make on a tax-deferred basis. The cash value of the policy accumulates based on the investments. Likewise, the cash value may decrease if there is a loss in market investments. Policy terms may vary based on plan option selections.
New York Life Insurance and Annuity Corporation (NYLIAC) Asset Preserver
NYLIAC Asset Preserver protects individual assets from long-term care costs. Individuals can access the policy benefits tax free to cover costs associated with long-term care. Beneficiaries receive the remaining amount of the death benefit after the insured’s death.
New York Life Legacy Creator
This plan is known as a Single Premium Variable Universal Life (SPVUL) permanent life insurance where investment options are managed in a fixed account. Beneficiaries are guaranteed the life insurance benefit, even when investments perform poorly.
NYLIAC Instant Legacy
This life insurance policy is also funded with an up-front premium payment that is generally paid tax-free to beneficiaries.
Survivorship Life Insurance
Survivorship life insurance is available for individuals whose estate may exceed an exclusion amount, resulting in an estate tax liability for heirs. This insurance policy covers a married couple under one policy and is payable to heirs after the deaths of both spouses.
This type of life insurance policy is generally used effectively as a tool in estate planning. Some of the benefits include:
- Simplicity for individuals to establish an irrevocable life insurance trust. The insurance benefit is separate from an individual’s estate.
- Premiums are usually lower to cover two individuals under one policy than having two separate life insurance policies.
- Liberal underwriting even if one individual was denied life insurance coverage for a single insurance product.
In summary, an important part of living is purchasing life insurance to provide for a surviving spouse or child. Obtaining life insurance through an employer-sponsored program with Aetna is typically an inexpensive way to have this type of security. However, if an employer-sponsored plan is not an option, individuals can still have this security with a variety of individual plans from New York Life.