About the Whole Life Insurance Plan

This new benefit plan for the University of Florida employees offers whole life insurance coverage. Click on Term vs. Whole Life for a discussion of the differences between term life and whole life insurance.

Whole life insurance

Whole life insurance is a type of permanent life insurance. As such, it is designed to meet a long-term need and to provide coverage whenever death occurs.

Determining Premium

Premium is determined based upon age at the time of applying for coverage and the amount of coverage desired. Obviously someone at 30 years of age will pay less for the same amount of coverage as someone who is age 50. One of the advantages of whole life insurance is that the initial premium will never increase. In other words, if your coverage commences when you are 30 years old, your premium will be the same every year thereafter. It will never increase.

Gender Does NOT Effect Premium

If you were to apply for coverage outside of the work place, your gender, and your health status most likely would effect your premium. In the University's new plan, your gender will not effect your premium and, in most cases, neither will your health status.

Only Answer One Health Question

Furthermore, the new plan offers an enormous advantage regarding health issues. If you were to apply for whole life insurance away from the work place, you would be required to answer many detailed health questions. Additionally, you would more than likely have to take a physical exam, including providing blood and urine samples. The insurance company would also probably request your medical files. With the plan available to you through the University, you can buy up to $100,000 of coverage (not to exceed 3 times your salary) by favorably answering one simple health question ("Have you been hospitalized at any time during the last six months?"). You can also buy additional coverage on your spouse and/or children. Additionally, you are able to purchase coverage greater than the above amount through a simplified underwriting arrangement.

Build Cash Value

Whole life insurance will also build cash value, earning interest at current rates. Regarding the policy that is part of this new benefit, the interest rate is guaranteed to be a minimum of 5.75%. The insurance company can, and currently is, applying an interest rate in excess of the minimum. Such excess, if any, would increase both your cash value and death protection.

The cash value in your policy can be accessed in several ways. You can terminate the policy and receive all the current cash value. Unfortunately, this option would also terminate your coverage (also, any cash value received in excess of the total premiums paid may be taxed as ordinary income). However, you can borrow an amount up to the full amount of your cash value (any unpaid loan at death would reduce your death protection).

If You Want To Stop Paying Your Premium

You may be asking yourself what options are available if you do not want to pay the premiums anymore. You would have two options. You could terminate the coverage and receive the cash value. Or, you could stop the premium payments and elect a reduced paid up policy. This later option would reduce your coverage, no additional premiums would be required, and the cash value will generally continue to increase.

If You Terminate Your Employment With UF

You also may be asking yourself what happens if I terminate my employment with the university. In this case you will have three options. The first two are as above, if you choose not to make anymore premium payments. More importantly, however, you can also choose to continue your coverage. Coverage would continue at the same annual rates with no decrease in coverage. In this event, the only change would be that you would pay the premiums directly to the insurance company rather than having them deducted from your paycheck.

This new plan also provides the option of purchasing coverage on your spouse and/or children and grandchildren. Regarding your spouse, there are three options. Option one reguires no detailed health questions or physical exam and allows you to purchase whatever amount of coverage $5.00 per week of premium would purchase at their attained age. With just a few health questions, but still no physical, you can purchase up to $50,000 of coverage. Amounts of coverage in excess of $50,000 would require additional health questions, and, generally, a physical exam. Spouse coverage is available even if the employee does not personally participate.

Children and Grandchildren

Regarding children and grandchildren, you may purchase a term life insurance rider to your policy, with no detailed health questions or physical exam, for $6,000 of coverage (when the child reaches age 25, this can be converted up to $60,000 of whole life coverage, regardless of health or occupation). You may also purchase an individual whole life policy on any or all of them. In this latter case, a few health questions are required and the amount of coverage would be whatever either $2.00 or $4.00 a week, at their attained age, would buy.

Disability Completion Benefit

Finally, this new benefit plan also includes a disability completion benefit (also known as waiver of premium). This means that if you become totally disabled, the insurance company will pay the premium for you (there is a six-month waiting period before this goes into effect). Not only will coverage be continued, but also the cash value will continue to grow as if you were making the premium payments (this benefit expires at age 60).