Supp Life

March 28, 2006 by bob.

If you look at the title of this blog it says Health Insurance. This post is about life insurance.

This is my blog. I can put what I want here. Deal with it.

Today I was talking to a client about life insurance. They work for a big company and have fairly good benefits, some of which are subsidized.

This person had maxed out their supplemental life insurance at $166,000 and wanted more coverage. He was looking for another $400,000.

I worked up some numbers and gave him the quote. Then I asked about his supp life.

Seems he is currently paying $28 and change every month. Not a bad deal . . . until next year.

In 2007 his premium jumps to $40 per month, almost $500 per year for $166,000.

The premium will go up again in another 5 years, and again 5 years after that.

I suggested he combine the $166,000 with the $400,000 we are going to apply for in a few days. By adding the $166,000 to the $400,000 he can get the full $566,000 and save about $10 a year.

Doesn’t seem like much but here is the kicker.

The premium on the $566,000 stays level for the next 30 years. That is not the case on the supp life with his employer. That premium will go up every 5 years.

The coverage on his $566,000 stays level for the next 30 years.

The $166,000 will cut by a third at age 70 and another 50% at age 75.

Right before he turns 70 the premium on the $166,000 will no longer be $40 a month. By then, if he still can afford it, it will be $203 per month.

This is not all that unusual. Some employer coverage, especially if it is subsidized, can be quite affordable.

Sometimes, but not always, dependent health insurance can be a good buy outside of the employer plan.

Sometimes, but not always, the supplemental life insurance can be as well.
Too bad most folks don’t know that.

If you are reading this, consider yourself one of those who just learned something new.

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