Basic Life Insurance—What Makes It Different From Other Types?

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Basic Life Insurance—What Makes It Different From Other Types?

Basic Life Insurance—What Makes It Different From Other Types?


Undeniably, there are a lot of different kinds of insurance from home insurance to long-term disability insurance, so when you hear of basic life insurance, your first thought might be a stripped-down version of life insurance anyone can access. While that’s partly true, the terminology doesn’t actually convey the complete picture. Below, we detail what is basic life insurance, the main advantages and drawbacks, and whether or not it’s enough for your needs.

What Is Basic Life Insurance?

Firstly, basic life insurance is a type of life insurance. That means it provides financial protection to the people you name as your beneficiaries (often your loved ones) upon your passing.

However, it’s not something that can be accessed by everyone. Basic life insurance actually refers to the basic level of coverage life insurance companies provide as part of their benefits package (if they have one). Generally, plans provide policies with a specific death benefit amount.

Also, depending on the plan the business has, employees may be required to pay for some, all, or none of the cost. That shouldn’t be a cause for concern though if employees do need to pay as these plans are often highly affordable. Typically, if an employee does need to pay, payment is required as a fixed dollar amount or based on an employee’s salary and taken off as a payroll deduction.

Co-workers discussing basic life insurance policiesWhat Are the Benefits of Basic Life Insurance?

One of the notable benefits of basic life insurance is that, in the vast majority of cases, it’s guaranteed. This means that there are no medical exams or questions that are required for people to qualify.

As such, this is especially beneficial for people with pre-existing conditions or other health problems that would normally cause them to have either much higher premiums or simply be denied coverage.

In addition (as we mentioned previously) basic life insurance is one of the most affordable kinds of life insurance available. You can get essential coverage without breaking the bank budgeting accordingly.

However, this kind of life insurance is not without its drawbacks. Because plans aren’t specifically tailored to your needs, and there’s not as much coverage that you’re offered. Plus, if you leave the company that offers this life insurance it’s very unlikely that you can continue to stay on their plan and continue to receive benefits.

Young woman researching basic life insuranceIs Basic Life Insurance Enough for Me?

This leads to your decision as to whether or not basic life insurance suits your needs. For people who have pre-existing conditions or health complications, it makes perfect sense to sign up for basic life insurance as they are guaranteed coverage they may have a harder time getting otherwise. However, for many other people, the choice will depend on their needs.

That being said, basic life insurance can often be added onto or complemented by supplemental or voluntary life insurance that can provide even more comprehensive insurance.

Overall, basic life insurance often provides at least some coverage that’s often worth taking if you don’t have any already.



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