Dependent life insurance is a traditional policy taken out to provide protection for those who depend on the income of the insured. The intent is to replace the income that would normally be earned by an insured if they were alive.
The purpose of dependent life insurance may sound straightforward, but there are still some questions you might have about it. It is this article’s intention to answer them.
What is optional dependent life insurance?
The idea of “Life Insurance” would seem to be based on the belief that your life is valuable. However, there’s no guaranteed money will be available when you die if you don’t have life insurance. That’s where Optional Dependent Life Insurance comes in! With an OPT-LD policy, when the insured dies their beneficiary can access the funds without having to go through a complicated and potentially costly probate process.
What is Optional Dependent Life Insurance?
Optional dependent life insurance (ODLI) is optional insurance that allows a beneficiary to access the funds after the insured person’s death. Most of the time, ODLI can only be taken out by someone who is married to the insured person. In addition, certain states only allow ODLI if it is already included in an employer-sponsored group plan.
So what can an OPT-LD policy buy?
There are two types of optional life insurance: Term and Permanent. An individual will be able to buy either one, but he can’t purchase both at the same time. Also, the amount cannot be more than $500,000. The maximum death benefit for a term policy is $250,000; whereas for permanent policies, it’s $500,000.
How much an OPT-LD policy cost depends on the premiums you choose. Some companies offer the same coverage for a smaller monthly premium than an individual would pay for term insurance. For example, one company offers coverage for $13.95 per month with a death benefit of $250,000; whereas if you would like to purchase term insurance with this company, you would have to pay $185 per month.
What does Dependent Life Insurance cover?
Benefits are usually paid for the life of a dependent spouse and/or children. The maximum amount of benefits that can be paid during the lifetime of the insured person depends on the period of coverage (e.g. 30, 20, or 10 years). These payments are made on a monthly basis and may continue after death as long as there is a beneficiary designated by the policyholder.
Who can apply for it?
Dependent life insurance is generally suitable only if the insured person’s income regularly depends on that of a partner or dependent. That means that you cannot put down your partner as a beneficiary. However, if your partner also has their own life insurance, they may be able to use it.
Who it is intended for?
Dependent life insurance is very popular with the elderly, who often use it to replace the income they would have earned if they had lived. If a person’s income drops after they reach 65, or even beyond that, life insurance policies are a useful tool. But if a partner has their own life insurance policy, you can consider adding your insurer as a beneficiary in order to use it to replace your income.
We hope that you enjoyed our blog post about dependent life insurance. We hope that it gives you information that you can use to decide if this type of policy is right for you. This is a great starting point for anyone who is looking for information on this type of policy. If you have any questions or would like to learn more, please contact us.