Today we cannot imagine the well-developed organization without decent care or compensation package. Most people nowadays are trying to find a company with the compensation package being as full as possible. Sometimes even the salary is on the second place, while compensation package is prior. The insurance program can be defined as coverage that provides some benefits or cash payments in case of illness, death or trauma. The overall risk of health care is estimated at first, along with health expenses in the specific target group. Therefore, the company can develop a strict finance structure of payments, such as the monthly premium tax, etc. It is made to ensure the money availability for the health care needs (Claxton 2002). All these benefits are controlled by three basic central structures:
- private business;
- non-profit organizations.
There are different types of insurance programs, such as term life insurance, universal life insurance, whole life insurance, accidental death insurance, short and long term disability insurance. The first type in the list is term life insurance. Term life insurance is the life insurance that provides financial coverage for a limited time period and at the fixed payments rate. Term life insurance is an opposite of permanent life insurance with fixed lifetime payments for the insured individuals. Term life insurance is actually death benefit, and is primarily used to cover responsibilities for the insured individuals. If compare term life insurance with permanent life insurance it is less expensive (still depending on the term length). It is also simple to understand and to conduct (Vohwinkle). You can choose different terms (e.g. 5, 10 or 20 years) and different coverage sum (from $100000 to few million dollars). The next advantage is that you can actually invest your money by yourself instead of having the insurance conducted by the insurance company. It is also important to outline, that term life insurance is more suitable for short terms rather than a long ones.
The next type of insurance is universal life insurance, which is the type of permanent life insurance. Moreover, it has an added financial component, so instead of choosing specific term and putting your premium towards the policy, some part of the premium will go into a cash account, which earns and accumulates interest. The universal life insurance is prevailing primarily in the United States. The universal life insurance provides some additional flexibility, so a person can actually stop premium payments for some time as long as cash can go over the cost of insurance (Vohwinkle). One more benefit is that you can decrease of increase death benefit over some time, along with borrowing in the loan form against the policy. Also universal life insurance offers protection for a person’s family and the very strategies of leaving a legacy.
The next insurance type is whole life insurance
It provides a face amount (minimum death benefit) without taking into account the life length. However, the premiums payment is a must. It is actually the key plus, because it secures a person from temptation of payments skip, which may result in further problems with funding. Another advantage is that fixed premiums actually allow you to project cash outlays carefully, taking everything into consideration (Vohwinkle).
Accidental death and dismemberment is another type of insurance. According to this insurance type, cash is paid to the beneficiary if an accident was the actual cause of death, losing of eyesight, speech, hearing or limb (Delly 2008). The important thing is that if you lose only one limb or eyesight in only one eye you will get only half of the benefit, or so-called “partial dismemberment”. Also you have to prove the consequences of the accident if you want to get the benefit – show the document or extract. If the person’s death is caused by mental or physical illness, suicide, intentional injuring, war (declared/undeclared, with all weapon), taking drugs and driving a car while being intoxicated, the money compensation will not be paid. It is also important to outline that sometimes the accidental death and dismemberment insurance is included into the health plans, making it an extra option (Delly 2008).
Long term disability insurance (or simply LTD) is the type of insurance, when a person is protected from income loss in case of the event, which led to his or her inability to work because of an injury, accident, disease etc. for a long period of time. LTD provides from 50 to 70 % of pre-accident salary, which is paid from 2 to 10 years or until age of 65 (it is most common practice). It is vital to outline that this type of insurance does not secure the worker from money loss due to work-related injuries, as they are covered with workers’ compensation package (Long Term vs. Short Term Disability Insurance). LTD is a part of employee package and is offered by a company. In the case when it is not offered by employer, it can be bought by the worker himself, though purchasing it by an individual is quite costly. However, the big advantage of individual LTD is that payments from it are non-taxable. Another benefit of individual plain is that LTD provided by the employer is often inadequate to meet disabled workers’ needs. Additionally, LTD usually provides more options, such as supplemental insurance for getting more monthly payments.
Finally, the last type of insurance is short term disability insurance. This is actually the same as LTD, but still it has some minor differences. First of all, it has different time period, which is usually from three to six months (from 10 to 25 weeks). The short term disability insurance typically offers 64% of pre-accident salary (Long Term vs. Short Term Disability Insurance). However, this number may vary, because such showings as employee’s position and amount of time worked in the company are taken into consideration. After the expiration of short time insurance package most part of employers suggest a move to LTD package. One more benefit of short term insurance is its affordability, mainly due to the time length.
- Claxton, G. (2002). How Private Insurance Works: A Primer. Institution for Health Care Research and Policy, Georgetown University, p. 225.
- Delly, J. (2008). Accidental death and dismemberment insurance. Retrieved December 21, 2013 from http://www.insurance.com/life-insurance/coverage/accidental-death-and-dismemberment-insurance.aspx
- Long Term vs. Short Term Disability Insurance. Retrieved December 21, 2013 from http://injury.findlaw.com/accident-injury-law/long-term-vs-short-term-disability-insurance.html
- Vohwinkle, J. Comparing Term, Universal, Variable, and Whole Life Insurance Policies. Retrieved December 21, 2013 from http://financialplan.about.com/od/insurance/a/Comparing-Life-Insurance.htm