American Life Insurance: What You Need To Know

American Life Insurance Company (also known as American Income Life Insurance Company) is an American unionized insurance company that provides traditional life, accident, and health insurance, as well as group insurance products. The company was founded in 1951 and has been based in Waco, Texas, since 1959. Licensed in 49 US states and the District of Columbia, it also operates in Canada and New Zealand. American Life Insurance Company offers supplemental insurance to labour unions, credit unions, and associations, and has a history of supporting unions in various ways, such as waiving premiums during strike action.

Supplemental life insurance

Pros and cons

Supplemental coverage offers several advantages but also has some limitations. It usually has higher coverage limits, is easily accessible, and has lower rates due to group pricing. It often doesn't require a medical exam, making it more accessible than individual policies. However, the coverage is only valid if you're actively working with the company, and it may be harder to replace if your employment ends.

Types of supplemental life insurance

There are a few different types of supplemental insurance offered by employers:

• Supplemental employee life insurance: This increases the coverage for the employee.
• Supplemental family life insurance: This provides a death benefit for the employee's spouse or dependent child.
• Supplemental accidental death and dismemberment: This covers death or loss of limb in a covered accident.

Determining the right amount of supplemental life insurance depends on your family's financial needs and how well your current coverage would support them if you were to pass away. Assess your financial obligations, such as mortgage payments, debts, and future college costs, and evaluate your existing coverage to ensure it is sufficient.

In summary, supplemental life insurance can provide additional peace of mind by enhancing your existing life insurance coverage and ensuring your family's financial security in the event of your death.

Traditional life insurance

Life insurance is a way to provide financial security for your loved ones after you pass away. There are several types of life insurance, including term life insurance, whole life insurance, universal life insurance, variable life insurance, and final expense life insurance. Each type offers different features and benefits to meet specific needs. Traditional life insurance refers to whole life insurance, which is a type of permanent life insurance that provides coverage for the entire lifetime of the policyholder.

Whole life insurance is a straightforward option for those seeking lifelong coverage. Unlike term life insurance, which covers the contract holder until a specified age limit, whole life insurance never expires. This means that as long as the policyholder continues to pay their premiums, their beneficiaries will receive a payout upon their death, regardless of when it occurs. Whole life insurance policies also include an investment component, allowing policyholders to accumulate wealth. Regular premium payments cover insurance costs, but they also contribute to equity growth in a savings account. This savings account accumulates a cash value that the policyholder can withdraw or borrow against when needed. Dividends or interest can build up in this account, and the funds can be used for various purposes, such as supplementing retirement income or covering unexpected expenses.

The death benefit provided by whole life insurance remains constant, and the cash value of the policy won't affect this payout. However, if the cash value grows to equal the death benefit amount by the time the policyholder reaches a set age, typically 100 or 120, the insurer will terminate the policy and pay out the coverage amount. Policyholders can also withdraw some cash value funds as a life insurance loan, which usually doesn't require a credit check and has a minimal loan approval process. It's important to note that if the policyholder passes away before repaying the loan, the remaining loan amount and interest will be deducted from the payout to the beneficiaries.

Whole life insurance is generally more expensive than term life insurance due to its lifelong coverage and investment component. The investment component of whole life insurance policies contributes to their higher cost compared to term life policies with similar coverage amounts. However, the premiums for whole life insurance are level, meaning they remain the same throughout the policy's duration, while term life insurance premiums can increase over time. Additionally, whole life insurance policies offer the security of guaranteed coverage, whereas term life insurance policies may become unaffordable or terminate after a certain number of years.

In summary, traditional or whole life insurance provides permanent coverage for the entire lifetime of the policyholder, along with an investment component that allows for wealth accumulation. It offers guaranteed death benefits, level premiums, and the ability to build cash value. While it may be more costly upfront, it provides long-term financial security and the flexibility to access funds during the policyholder's lifetime.

Accident and health insurance

Accident insurance specifically focuses on accidental injuries, offering a lump-sum payout to policyholders who suffer a covered injury. This can include anything from emergency situations to more common accidents, and it helps cover expenses associated with hospital trips, tests, exams, and other related costs. Accident insurance is usually purchased as a supplement to health insurance, and it can be bought as a personal policy or received through an employer.

Health insurance, on the other hand, has a broader scope and covers a wide range of medical treatments and services, including doctor's visits, hospitalization, prescription drugs, pregnancy, and childbirth. It is designed to cover the policyholder's medical costs in exchange for monthly premium payments, and it may be provided by an employer, purchased privately, or obtained through federal programs such as Medicare or Medicaid.

Group insurance products

In the context of American Life Insurance, group insurance products are one of the services provided by the company, alongside traditional life and health insurance. Group insurance policies can vary in their specifics, but they generally function similarly to individual insurance policies, with certain benefits and coverage tailored to meet the needs of a specific group.

For example, a group life insurance policy might provide a death benefit to the employee's chosen beneficiary, helping to ensure financial stability for their loved ones. Similarly, group accident or health insurance can assist with medical expenses, providing coverage for emergencies or critical illnesses that may not be fully covered by standard health insurance plans.

Insurance guaranty associations

Insurance companies are legally required to be members of the guaranty association in states where they are licensed to operate. Most states have two types of associations: a life and health guaranty association, and a property and casualty insurance guaranty association.

Life and health guaranty associations cover individual and group life insurance policies, annuities, long-term care, and disability income insurance policies. If an insurance company cannot pay policyholder claims, the guaranty association will obtain funds by assessing member insurers of a similar type. These funds, along with the assets of the insurer, are then used to pay the covered claims of the policyholders of the insolvent company, up to a certain limit. The guaranty association may also provide continued coverage for the policyholder or transfer their policies to stable insurers.

The amount of coverage provided differs from state to state and is set by state statute. Most states follow the National Association of Insurance Commissioners' (NAIC) Life and Health Insurance Guaranty Association Model Law, which provides the following amounts of coverage (or more):

• $300,000 in life insurance death benefits
• $100,000 in net cash surrender or withdrawal values for life insurance
• $250,000 in present value of annuity benefits, including cash surrender and withdrawal values
• $300,000 in long-term care insurance benefits
• $300,000 in disability income insurance benefits

In the majority of states, there is a total cap of $300,000 in benefits for any one individual with one or multiple policies with the insolvent insurer.

Frequently asked questions