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 HOUSE
BILL 857
Effective October 1, 1996, House Bill 857 enables the
one, remaining eligible employee in a company of
two or more full-time employees to obtain small group
coverage.
House Bill 857 does NOT apply to:
⇒ Companies, sole proprietors, corporations or partnerships
with only one (1) eligible employee because
all remaining employees are part-time.
⇒ Self-employed individuals including corporations,
where the owner is the ONLY person in the
company.
⇒ A 1099 employee.
⇒ A Medicare eligible employee (A or A&B).
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Term Insurance
Term insurance is designed to provide
life insurance protection for a limited
period of time. It might be for 1 year or 10 years, but
the face amount of the
policy is payable only if the insured dies during the time
specified in the policy.
If the insured survives the limited term of the policy,
the insurance company
has fulfilled its part of the contract and no payment or
refund is due.
Term insurance can be compared to a fire policy on a home.
The fire policy
is purchased to protect the homeowner from financial loss.
However, if the
home does not suffer a fire loss, the homeowner’s
premium is not returned.
The homeowner had the peace of mind that comes with insurance
protection,
but no cash value accumulation or refund.
Characteristics of Term Policies
The premiums for a term policy are
usually level over the length, or term, of
the policy. At the end of the policy, the policyowner may purchase
another
policy. The new policy almost always requires a higher premium
than the
expired policy. This new, higher premium, will then be in effect
for the
length of the new term.
Types of Term Policies
Term policies are defined by the nature of the coverage, the
options available
under the contract, and the way the face amount of the policy
changes
throughout the life of the policy. The face amount, or face
value, of the policy
is the amount of money listed on the face page (first page)
of the policy.
This is the amount that will be paid in the event of the insured’s
death.
Renewable Term
A renewable term policy is one that may be renewed at the end
of the specified period of time for another
term period without evidence of insurability.
Thus, a 1-year renewable term policy expires after 1 year but
is renewable for
additional 1-year periods. A 5-year renewable term policy can
be renewed for
subsequent 5-year periods. Renewability may be limited to a
certain number
of renewals or to a specified age, such as 85. The renewable
feature must be
written into the original policy at the time of purchase.
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