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When life insurance policy types are listed and described, the focus is usually on two of them: term life and whole life policies. There are more types than those two, though, and they’re typically more complex. They include universal life insurance — and, as a subset, indexed universal life insurance, or IUL. This is an advanced type of policy, where interest on the cash value component is linked to a market index.

In this post, we’ll define IUL, explain how it works, share its pros and cons, and more.

Definition of Indexed Universal Life Insurance (IUL)

First, let’s define universal life insurance. Universal life insurance is a permanent policy, which means that it doesn’t have a set term (say, for 10 or 20 years) and it comes with a cash value. A universal life insurance policy allows policyholders to flexibly adjust premiums and death benefits, though this can have an adverse effect on the policy.

Now, what is IUL? Indexed universal life insurance adds another twist to the equation. This is a type of universal life insurance that doesn’t come with a fixed interest rate. Instead, its growth is tied to a market index. (More about the index soon.)


💡 Quick Tip: With life insurance, one size does not fit all. Policies can and should be tailored to fit your specific needs.

How Does IUL Work?

After someone buys an IUL policy, they pay premiums, which is similar to other types of life insurance policy structures. Part of that premium covers the insurance costs that, like with other types of life insurance, are based on the insured’s demographics. Remaining fees paid go towards the cash value of policy. Interest paid is calculated in ways that are based on an index (or indexes).

This may sound similar to investing in the stock market, but there’s a key difference. The part of the premium that goes towards the cash value of the policy doesn’t get directly invested in stocks. Instead, the market index(es) is how the interest rate and amount is determined, with a minimum fixed interest rate usually guaranteed.

IULs typically offer policyholders a choice of indexes and allow them to divide the cash value portions of their premiums between fixed and indexed account options.

Explaining the “Index” Feature

A market index represents a broad portfolio of investments with the use of weighted average mathematics to come up with the index figure, which then plays a central role in the amount of interest paid. The three most commonly used market indexes in the United States are the Dow Jones, the S&P 500 and the Nasdaq Composite.

Note that funds invested for the cash portion of the insurance policy do not need to be invested in the index used to calculate the interest. Many times, insurers invest these dollars in bonds rather than stocks.

Benefits and Drawbacks of IUL Insurance

Like other types of life insurance policies, indexed universal life insurance comes with pros and cons. Here is an overview of the benefits and drawbacks of IUL.

Benefits of IUL Insurance

Benefits include:

•   There’s a death benefit for beneficiaries, as well as the cash value of the policy.

•   Withdrawals can be tax-free up to the amount of premiums paid.

•   Premiums are flexible — you can pay different amounts each month as long as it’s enough to cover fees and doesn’t go beyond an IRS limit.

•   Gains are locked in each year, which means you can’t lose the previous years’ gains. However, if the market is down the following year, it can decrease unless the policy has a built-in floor.

•   Because of the annual reset feature, you never need to make up any losses from prior years.

•   No mandatory distributions exist.

•   You can explore your tax benefits with your accountant or other financial advisor, and they may be significant for your situation.

•   You can borrow against this policy and, if you do, you typically won’t face negative tax consequences.

Recommended: Life Insurance Definitions

Cons of IUL Insurance

Challenges include:

•   An IUL is complicated and, to get the most benefits from this policy, you’ll need to understand how to maximize its value.

•   Although you can pay a minimal premium amount when you want, this can have a negative overall effect on the policy’s cash value.

•   Because the cost for the insurance portion depends on your rating, how much is insured and your age, the cost will go up over the years as you get older.

•   Although the rate is based on an index, policies come with a cap. So, during high index years, you likely won’t realize the full benefit because of this cap. On the flipside, however, many policies also have built-in floors to offset the cap.

•   Fees can take a big chunk out of the policy, causing you to lose much of its value.

•   If you don’t keep the policy in force, you may lose the death benefit (which is true of other types of policies), along with the extra money paid into the premiums.

Alternatives to IUL Insurance

Whether you’re not sold on IUL insurance or simply want to know what your other life insurance options are, here are some of the alternatives to indexed universal life insurance:

•   Adjustable life insurance: This combines aspects of term life insurance with whole life and provides policyholders with the flexibility to adjust the policy’s amount, term premiums and more. Adjustable life policies also come with a cash value component. A key benefit of adjustable life insurance is that you can make adjustments to your policy without the need to cancel the current policy or buy a new one.

•   Variable universal life insurance: Variable universal life is similar to IUL, as it is a permanent life insurance policy that has a cash value and flexible premiums. The investment portion comes with subaccounts and can resemble investing in mutual funds. When the market is doing well, this can benefit the policyholder, but when it’s not, significant losses can occur.

•   Standard universal life insurance: Then, of course, there are universal life insurance policies. These come with a fixed interest rate rather than one tied to an index.

•   Whole life insurance: Additionally, there’s the more basic whole life insurance policy with standard premiums. There is also a guaranteed death benefit and a cash value component.

•   Term life insurance: Then, life insurance at its simplest: term life insurance policies. These don’t come with cash value components or any real bells and whistles. These policies have a term limit (perhaps 10 to 20 years) and are more straightforward and affordable than other options, coming with a death benefit to beneficiaries when the covered individual dies while the policy is paid up and in force.

•   Current assumption whole life insurance: Another type of cash value insurance is called current assumption whole life (CAWL), and it has similarities to universal life insurance policies. Premiums are fixed for a certain period of time and, on predetermined dates, premiums are recalculated (and perhaps the death benefit is, as well). Plus, interest is handled in a way that’s similar to universal life.

Recommended: How to Buy Life Insurance

Is IUL Insurance Right for Me?

By comparing this overview of indexed universal life insurance with, say, term or whole life insurance, you can see that IUL insurance is quite complex. If, though, you’re earning a high income or want to explore long-term investment opportunities, it can make sense to consider whether the tax benefits associated with an IUL would be worthwhile.

For those who do consider moving forward with exploring indexed universal life insurance, it’s important to compare its pros or cons against those of other types of life insurance. Also take the time to research and compare different life insurance policies.


💡 Quick Tip: Term life insurance coverage can range from $100K to $8 million. As your life changes, you can increase or decrease your coverage.

The Takeaway

Although the question of “What is IUL?” is quite short, the answer isn’t. If this type of policy interests you, consider exploring it in more depth to ensure that you’re clear about its complexities.

SoFi has partnered with Ladder to offer competitive term life insurance policies that are quick to set up and easy to understand. Apply in just minutes and get an instant decision. As your circumstances change, you can update or cancel your policy with no fees and no hassles.

Photo credit: iStock/DragonImages

Coverage and pricing is subject to eligibility and underwriting criteria.
Ladder Insurance Services, LLC (CA license # OK22568; AR license # 3000140372) distributes term life insurance products issued by multiple insurers- for further details see ladderlife.com. All insurance products are governed by the terms set forth in the applicable insurance policy. Each insurer has financial responsibility for its own products.
Ladder, SoFi and SoFi Agency are separate, independent entities and are not responsible for the financial condition, business, or legal obligations of the other, SoFi Technologies, Inc. (SoFi) and SoFi Insurance Agency, LLC (SoFi Agency) do not issue, underwrite insurance or pay claims under LadderlifeTM policies. SoFi is compensated by Ladder for each issued term life policy.
Ladder offers coverage to people who are between the ages of 20 and 60 as of their nearest birthday. Your current age plus the term length cannot exceed 70 years.
All services from Ladder Insurance Services, LLC are their own. Once you reach Ladder, SoFi is not involved and has no control over the products or services involved. The Ladder service is limited to documents and does not provide legal advice. Individual circumstances are unique and using documents provided is not a substitute for obtaining legal advice.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOPT0224007

Life insurance policies are available for children and are often marketed as paying out a death benefit if the child were to pass away as well as potentially providing a savings vehicle for the insured.

It’s a lot more comfortable to contemplate these policies funding, say, a child’s education than handling expenses at the time of death. But both are facets of these products. In addition, these policies can help prove a child’s insurability later in life. Let’s take a closer look if this coverage might be right for your family.

What Is Child Life Insurance?

Life insurance for children is similar to a policy for an adult. If premiums are paid regularly, then there’s the guarantee of a death benefit if the child dies. A parent, legal guardian, or grandparent takes out the policy (making them the policyholder). This person can be the beneficiary who would receive the death benefit, if applicable, but they don’t have to be.

Before getting into more detail about policies for children, here’s a brief overview of the two types of life insurance: term and permanent. Each is available for children as well as adults.

Term Life Insurance

As the name implies, term life insurance comes with a pre-determined term, often 10, 20, or 30 years. If the insured person dies within that time frame, then a death benefit is paid out to beneficiaries (people designated to receive those funds). At the end of the term, the policy may be able to be renewed, allowed to lapse, or converted into permanent life insurance. If the insured is still alive at the end of the term (and we hope they are), there is not a refund of the premiums paid. The service was there waiting but wasn’t tapped.

For a child, this would typically be an add-on to a parent’s insurance policy. It would be a death benefit-only policy, but it might be able to be converted into an adult policy when the insured reaches adulthood.


💡 Quick Tip: Term life insurance coverage can range from $100K to $8 million. As your life changes, you can increase or decrease your coverage.

Permanent Life Insurance

Unlike a term policy, permanent life insurance doesn’t expire as long as premiums are paid. Whenever the insured dies, a death benefit is paid. These plans also involve a savings vehicle, in which part of the premiums paid go into a cash account which can later be tapped or borrowed against. Premiums are typically higher than term life insurance (often several multiples of the term life insurance price).

When getting this kind of policy for a child, yes, there’s the death benefit for a worst-case scenario, but there’s also a component that builds a savings account, which is like a gift to the child. When the insured individual reaches adulthood (typically at 18 or 21 years of age, these policies often allow the now-adult to either take the policy’s cash value or continue payments and coverage.

How Does Life Insurance for Children Work?

The adult who plans to take out the policy will fill out an application. There isn’t a medical exam involved like there can be for adults, which streamlines the process.

Life insurance policies for children are often permanent life policies, meaning coverage can last their entire lives if premiums are kept up. Premiums stay the same over the lifetime of the policy, and part of the premium is invested and becomes a cash value that can be withdrawn during the child’s life. These are usually whole life policies, meaning the cash earns a fixed rate of interest.

Check the parameters of a policy that you’re considering buying. Many allow you to buy one for a child who is 17 years old or younger, although some policies won’t go up to age 17. The policyholder commonly transfers the policy to the child when they become adults, but this can be done at any time and some policies automatically transfer into the child’s name at a designated time.

For term life insurance for kids, an option is to add a rider (an optional add-on) to your own term life insurance policy. This can be an affordable option, and one rider may cover all of your children in incremental amounts. The child would be insured to adulthood, at which point the policy would lapse or could be extended by the now-grown child, if they assume paying the premium.

When Does Life Insurance for Kids Make Sense?

Here are four reasons why you might decide to buy life insurance for kids include:

•   Investment purposes

•   Because of health issues or concerns

•   To enhance future insurability

•   In case the worst happens

Here’s more about each.

Investment Purposes

As premiums are paid, the cash value of a whole life policy (a kind of permanent insurance) gradually increases. When your child takes over the life insurance policy, they can surrender — or cancel — it and collect the cash value.

They might choose to use it as collateral for a loan. Or they could keep paying for the policy, which will continue to increase the cash value. If this is your primary motivation, you may want to consider whether this goal is better served by another vehicle, such as a 529 savings account for college costs).

Health Issues or Concerns

If a child is born with health issues or your family has a significant, genetically determined health condition, having a life insurance policy may give you more of a sense of security.

Enhance Insurability

When purchasing a life insurance policy for a child, you are ensuring they have some insurance if they have a major health-altering diagnosis during the term of the insurance. There may be the possibility of extending this coverage.

The Worst Happens

Nobody likes to think about losing a child. If this traumatic event does occur, life insurance will help to cover funeral expenses without being subject to income tax. This can help to eliminate the financial worry of funeral costs and allow you to grieve without this concern. The policy may also cover therapy in this worst-case scenario and/or loss of wages if you were to take a leave of absence from work in the aftermath of this situation.

Recommended: Life Insurance Definitions

Benefits of Child Life Insurance

What you’ve just read outlines some of the reasons why it can make sense to buy life insurance for kids. It can serve as an investment vehicle; provide security if health is a concern; boost future insurability, and cover expenses if the worst situation happens.

Here are some other benefits to consider:

•   Life insurance for children tends to be very affordable. The younger a child is when you purchase the policy, the lower the premium.

•   With whole and term life insurance, premiums remain the same, guaranteed, as long as payments continue being made.

•   With a guaranteed insurability rider on the policy, more coverage can be purchased for that child without the need to answer health questions. This is true even when they’re adults depending on the policy type.

•   If the child later accesses the cash value in the policy, they can use the money for their own unique needs — whether that’s for college tuition, a wedding, a car, or house.

Recommended: 8 Popular Types of Life Insurance for Any Age

How Much Is Life Insurance for Children?

Premiums are based upon the amount of the policy and the age of the child when the policy is first taken out. In some cases, this may be as young as birth or 14 days. Price varies based on gender.

Coverage amounts are typically much lower than for a policy that insures an adult. After all, the goal here isn’t to replace the loss of earning power. Instead, the limits usually range from $10,000 to $100,000, but some companies may allow more than $100,000. At the time of writing this post, a child who is four years old or younger can often be insured for a $10,000 policy for under $5 a month, and a $50,000 one for under $20 a month.

Prices increase incrementally as the child ages. By the time that they’re ages 15 to 17, a $10,000 policy may be closer to $8 per month and a $50,000 one about $35 monthly.


💡 Quick Tip: With life insurance, one size does not fit all. Policies can and should be tailored to fit your specific needs.

The Takeaway

Child life insurance allows parents, legal guardians, and grandparents to apply and pay for a policy on behalf of a child. While a child doesn’t have earning power you are seeking to protect, there are benefits to this kind of policy, including creating a savings vehicle for the child. Take a careful look at the insurance options and your family’s financial goals to determine if this is the best path for you.

SoFi has partnered with Ladder to offer competitive term life insurance policies that are quick to set up and easy to understand. Apply in just minutes and get an instant decision. As your circumstances change, you can update or cancel your policy with no fees and no hassles.

Photo credit: iStock/FatCamera

Coverage and pricing is subject to eligibility and underwriting criteria.
Ladder Insurance Services, LLC (CA license # OK22568; AR license # 3000140372) distributes term life insurance products issued by multiple insurers- for further details see ladderlife.com. All insurance products are governed by the terms set forth in the applicable insurance policy. Each insurer has financial responsibility for its own products.
Ladder, SoFi and SoFi Agency are separate, independent entities and are not responsible for the financial condition, business, or legal obligations of the other, SoFi Technologies, Inc. (SoFi) and SoFi Insurance Agency, LLC (SoFi Agency) do not issue, underwrite insurance or pay claims under LadderlifeTM policies. SoFi is compensated by Ladder for each issued term life policy.
Ladder offers coverage to people who are between the ages of 20 and 60 as of their nearest birthday. Your current age plus the term length cannot exceed 70 years.
All services from Ladder Insurance Services, LLC are their own. Once you reach Ladder, SoFi is not involved and has no control over the products or services involved. The Ladder service is limited to documents and does not provide legal advice. Individual circumstances are unique and using documents provided is not a substitute for obtaining legal advice.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Auto Insurance: Must have a valid driver’s license. Not available in all states.
Home and Renters Insurance: Insurance not available in all states.
Experian is a registered trademark of Experian.
SoFi Insurance Agency, LLC. (“”SoFi””) is compensated by Experian for each customer who purchases a policy through the SoFi-Experian partnership.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOPT0224008

With costs as low as $10, making a will doesn’t have to be expensive, but you may want to spend more to get exactly what you need.

Granted, the prospect of writing a will can feel boring, morbid, and as if it will be a big drain of time and money. While there’s no doubt that thinking about a world without you in it isn’t “fun,” the peace of mind that people can obtain from making a will, the right will, can be invaluable.

Whether you choose to go with an online template that will guide you through the how-to’s of creating a will or work with an attorney, it’s important to know your options. Let’s dive into that now and see how much making a will costs and which approach is best for you.

How Much Does It Cost to Make a Will?

The cost of a will varies from free to thousands of dollars, depending on whether you do it yourself or work with an attorney. Some people with a fairly straightforward situation (basic assets, one child) may find that an online template provides everything they need at a low cost. In general, however, people with high-net-worth or a complex personal situation, such as needing to provide for a disabled family member, may find it advantageous to work with an attorney.

You may wonder if you need a template at all. Can’t you just take pen to paper to share your wishes? In some states, the answer is yes: A handwritten will is legal. But there are good reasons to not write up a will on a piece of notebook paper. Not only can these take longer to go through probate — a legal process that vets the validity of a will — but a template may help make sure all bases are covered and legally valid.

There are templates online that are free, but some that are state-specific and go into greater depth (say, by guiding you through more questions about your situation) may cost from $40 up to over $100.

If you work with an attorney, you may pay $1,000 or more to create a will. But working with an attorney may be beneficial if you have a complex situation. For example, an attorney can help you create a trust, which can be one way to avoid probate and may provide tax advantages for your heirs. They may also have recommendations for the most tax-advantageous way to set up a will and can also answer any questions that may come up as you make the will.

Regardless of how you create a will, it’s also important to ensure that your will is legal in your state. This may mean having the will notarized or witnessed when you sign. It can also be a good idea to make several copies of the will, and let your executor know where the will can be found.

You also may need to update your will. You can do this via a codicil (this is akin to a PS to your will), but in many cases, it may make sense to create an entirely new will to avoid confusion. You may consider updating or redrafting your will whenever a major life event occurs, such as marriage, divorce, or the birth of a new child. If you’re working with a lawyer, ask them how they will handle potential changes and how much they will charge.


💡 Quick Tip: We all know it’s good to have a will in place, but who has the time? These days, you can create a complete and customized estate plan online in as little as 15 minutes.

The Cost to Have a Lawyer Write a Will

Having a lawyer write a will may be the most expensive option at $1,000 or more, depending on where you live and the complexity of the will. However, this path can have its benefits.

Creating an Estate Plan

Working with a lawyer can ensure you cover all bases and potentially create an estate plan. This can maximize tax-savings opportunities for your heirs. As part of this, a lawyer can be helpful in setting up a trust. A trust can be a tax-advantageous way to distribute assets upon your death and help avoid the possibly long and winding process of probate.

Negotiating a Large or Complicated Estate

You also may want a lawyer if you have a large or complicated estate, with a variety of assets, which could be investments, real estate, and the like. Also, if you have a complicated family situation, a lawyer can be very helpful in creating a will that addresses these situations. In this case, scenarios include divorce, remarriage, step-children, or complex (possibly contentious) relationships.

Developing End of Life Documents

When drawing up a will, a lawyer also can make sure that you have all end-of-life documents in place. While “will” can be used as a catchall term for end-of-life documents and directives, other important documents can include:

•   A medical power of attorney

•   A living will or advanced healthcare directive

•   Do-not-resuscitate orders

All of the above documents reflect what would happen if you were no longer able to advocate for yourself and needed someone to make medical decisions for you.

Before you work with a lawyer, make sure you’re clear on the fee structure: Will they charge by the hour? How much will it cost to update things in the future? Is there anything you can do on your own to help save money?

Recommended: What Happens If You Die Without a Will?

Cost Of Writing a Will Yourself

Online templates range from free to several hundred dollars, depending on the complexity and the range of documents provided. Online templates can help guide you through itemizing your assets and can be simple to update if necessary. Here are some details to note:

Online Templates Can Offer a Speed Advantage

Online templates may advertise that wills can be completed in 15 minutes or less. This can be true as long as you have relevant information at your fingertips. Prior to beginning a will (either online or with a pro), it can be helpful to itemize assets and discuss guardianship and executor plans with the people you hope to name prior to starting. This will make the process run more smoothly.

Online Templates May Need Witnessing

Once an online template is filled out, it will likely need to be signed and witnessed to be made legal. Keep this in mind: If you are thinking you can complete your will 100% online and don’t need to leave your home, you may be in for a surprise.

Some online services offer attorney services for an additional cost. This can be a hybrid option that allows you to have a lawyer answer any specific questions while doing the majority of the work yourself.

What’s the Difference Between a Trust and a Will?

You may see the terms trust and will used interchangeably. That’s wrong; a trust is not a will! A trust is a customized estate planning tool that can be helpful to heirs in addition to a will. If you hold assets such as real estate or have a positive net worth, a trust may make sense.

A trust can help your heirs:

•   Avoid probate, the legal (and sometimes lengthy) process in which property is distributed

•   Potentially limit tax implication of any gifts or inheritances

Trusts can be complex, but a fairly simple trust can be created through online templates. Having a trust can help ensure that your assets not only go to the people you intend them to go to, but that your heirs are provided for exactly in the way you intended. The time spent making the trust can pay off in peace of mind, both for you right now and for your heirs in the future.


💡 Quick Tip: It’s recommended that you update your will every 3-5 years, and after any major life event. With online estate planning, changes can be made in just a few minutes — no attorney required.

Does a Will Need to be Notarized?

You’ve taken the time, created a will, and printed it out. You’re done, right? Not so fast! A will usually does need to be signed and watched by a witness.

What’s more, while a will does not always need to be notarized to be valid, it may be in you and your beneficiaries’ best interests to do so. When a will is notarized, it is considered “self-proving,” which helps confirm that you had the mental capacity to create the will and were not under any duress. It proves the validity of the document and therefore can help avoid probate. Notarizing a will is typically a fairly minor expense of up to $15.

While it can be tempting to put off the notarization process (we know, it can be a hassle to find a notary nearby), getting it done immediately ensures that there are no loose ends if the worst were to happen unexpectedly. It can also be a good idea to make sure the will is printed out and put in a safe place, like a bank safe, and that your executor knows where to find it.

What Should You Never Put in a Will?

There are some things you want to sidestep when creating a will. Here are some considerations that can make the probate process more difficult.

•   Certain types of property, including property owned jointly, life insurance, or other accounts with a beneficiary already named.

•   Specific funeral or end of life wishes. The will may not be read until weeks or months after death.

•   “Rules” about who gets what. A will is not the place to put limitations on gifts, such as money only being available if someone were to marry or turn a certain age.

•   Providing money to pets. However, you can set up a trust to ensure that a pet is provided for.

•   Provisions for taking care of a dependent beneficiary. These kinds of long-term care needs can also best be set up in a trust.

In short, a will can’t cover all the what-ifs, but in many cases, a trust can do so. If you’re not sure how to appropriately manage your estate, consider consulting with a lawyer.

The Takeaway

Creating a will does not need to be expensive or time-consuming to be valid. While a trust may make sense for complex needs or if you have a positive net worth, having a will drawn up in the short term can cover your bases, ensure guardianship wishes are met if you have kids, and provide peace of mind now and in the future. Whether you spend $10 or over $1,000 creating one, if you have assets and/or dependents, now is a good time to act!

When you want to make things easier on your loved ones in the future, SoFi can help. We partnered with Trust & Will, the leading online estate planning platform, to give our members 15% off their trust, will, or guardianship. The forms are fast, secure, and easy to use.

Photo credit: iStock/fizkes

Auto Insurance: Must have a valid driver’s license. Not available in all states.
Home and Renters Insurance: Insurance not available in all states.
Experian is a registered trademark of Experian.
SoFi Insurance Agency, LLC. (“”SoFi””) is compensated by Experian for each customer who purchases a policy through the SoFi-Experian partnership.

Coverage and pricing is subject to eligibility and underwriting criteria.
Ladder Insurance Services, LLC (CA license # OK22568; AR license # 3000140372) distributes term life insurance products issued by multiple insurers- for further details see ladderlife.com. All insurance products are governed by the terms set forth in the applicable insurance policy. Each insurer has financial responsibility for its own products.
Ladder, SoFi and SoFi Agency are separate, independent entities and are not responsible for the financial condition, business, or legal obligations of the other, SoFi Technologies, Inc. (SoFi) and SoFi Insurance Agency, LLC (SoFi Agency) do not issue, underwrite insurance or pay claims under LadderlifeTM policies. SoFi is compensated by Ladder for each issued term life policy.
Ladder offers coverage to people who are between the ages of 20 and 60 as of their nearest birthday. Your current age plus the term length cannot exceed 70 years.
All services from Ladder Insurance Services, LLC are their own. Once you reach Ladder, SoFi is not involved and has no control over the products or services involved. The Ladder service is limited to documents and does not provide legal advice. Individual circumstances are unique and using documents provided is not a substitute for obtaining legal advice.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOPT0224006

Having a copy of your car insurance declaration page is important because it offers an overview of your car insurance policy. Provided by your insurance company, your auto insurance declaration page can help you understand how you are (and aren’t) covered, among other crucial information — which is why it matters to know how you read yours.

In this article, we’ll walk you through how to read a car insurance declaration page and also explain how to get an insurance declaration page.

What Is an Insurance Declaration Page?

You can think of your automobile insurance declaration page as a summary of your overall policy, containing key information about your coverage, including which vehicles are covered and how to contact your car insurance agent. (You may hear this summary referred to as a “dec page” for short.)

The information detailed in your dec page is important for each insured driver to have on hand. If you’re involved in an accident or otherwise need to file a claim or contact your agent, this page can guide you through who to contact and what coverages you have. It can also help if you decide to compare policies to see if you’ve got the best deal for the premiums you’re paying.


💡 Quick Tip: Saving money on your fixed costs isn’t always easy. One exception is auto insurance. Shopping around for a better deal really can pay off.

Sample Car Insurance Declaration Page

Elements of your auto insurance declaration page will typically include the following:

•   Contact information

•   Loss payee (lender/lessor)

•   Policy number and coverage dates

•   Premium amounts

•   Insured drivers

•   Vehicle information

•   Coverages

•   Limits

•   Discounts

•   Deductibles

Here’s more about each.

Contact Information

This includes contact information for your insurance agent as well as your own name, address, and phone number.

Loss Payee

This will list any other party with an interest in the vehicle, typically the lender if you’ve financed or the lessor if you’ve leased the vehicle.

Policy Number and Coverage Dates

Just like with your mortgage, credit card account, car loan, and so forth, your auto insurance policy comes with a unique account number so that coverage specifics can be accessed when needed. The insurance policy will also have a beginning and end date, perhaps for a six-month period that can then be automatically renewed, and those dates will appear on the declaration page, allowing you to ensure that you have the current version on hand.

Premium Amounts

This page will also list your current premium amount so you know how much to pay (or how much will be automatically deducted from your account). If the declaration page is for a six-month term, it may show an amount of $660 — and, if the agent accepts quarterly payments, then that would be half of that amount: $660 for six months divided by two, which amounts to $330 for three months. If payments are broken down monthly, that would be $660 divided by six, which comes out to a monthly payment of $110.

Insured Drivers

If only one person is on the policy, then this section is pretty simple: their name will be listed as the insured driver. If multiple people are covered on the policy, then all of the household drivers would be listed by name. A person must be added to and listed on the policy before they can be covered by the insurance; if they’re removed from the policy, an updated auto insurance declaration page should be issued without their name.

Vehicle Information

If only one vehicle is insured under this policy then, again, this section is pretty straightforward. It will include the year, make, model and vehicle identification number (VIN) for the covered vehicle. If multiple household vehicles are covered, information will be listed about each one.

Recommended: How Does Car Insurance Work?

Coverages

The automobile insurance declaration page will list the types of coverage included on the auto policy as well as the dollar amounts associated with them. Categories can include:

•   Bodily injury: This covers costs if you cause injuries to other people through an auto accident.

•   Property damage: This covers damage to another person’s car or property (such as a fence or building) if you’re at fault in an auto accident. It can also cover costs for the removal of trees, signs, and other debris as needed after an accident.

•   Medical coverage: This covers medical payments and lost wages if you or a passenger gets injured in the accident. It can also cover funeral costs.

•   Uninsured/underinsured motorist bodily injury: If the other person in the accident isn’t insured or doesn’t have enough insurance to cover the damages incurred, this will kick in to help pay for repairs and other costs.

Limits

For each type of coverage listed, there will be limits — sometimes per person and other times per incident. In all states except Florida, liability insurance is required, although laws vary regarding the amounts needed. Some states will require bodily injury and property damage liability, while others may also require uninsured motorist coverage or personal injury protection.

Note that these state requirements list the minimum required, not necessarily how much auto insurance you may really need in case of an accident. If you have a loan on the car, your lender may require comprehensive and collision coverage, even though your state laws don’t require them.

Recommended: 5 Steps to Switching Your Car Insurance

Discounts

You may receive discounts on your policy, perhaps because of vehicle features (anti-lock brakes or stability control, for example) or because of your driving history. These should be listed on your declaration page along with the vehicles they apply to. Your insurance agent may provide multiple car discounts and/or discounts if you also have a homeowners policy with them, as two more examples.

Deductibles

Deductible specifics should be listed on the auto insurance declaration page as well. The deductible (an important auto insurance term to know) is the amount you’re required to pay out of pocket before your insurance policy kicks in to pay the rest, subject to policy limits.

Coverage types, such as collision, personal injury, and uninsured motorist, can each have their own deductibles — perhaps $500 or $1,000 each. In general, a low deductible policy comes with higher premiums, while a high deductible generally has lower premiums.


💡 Quick Tip: If your car is paid off and worth only a few thousand dollars, consider updating your car insurance: You might choose to opt out of collision coverage and double down on liability.

How to Get Your Insurance Declaration Page

When you buy a new car insurance policy or change a current one, you should receive a copy of your new or updated automobile declaration insurance page. If you can’t find your copy, you can often download one from your insurance agent’s website or through their mobile app.

If the website doesn’t have that feature or you don’t want to go that route, there are other options for how to get an insurance declaration page. In that case, you could contact your agent for another copy, which could be a hard copy or a digital one.

The Takeaway

The auto insurance declaration page serves as a summary of your policy, including coverages, premiums, covered vehicles, deductibles, and more. Knowing how to read yours will allow you to know how much you’re protected in case of an accident and how to contact your insurer. It makes sense to have a current copy of your declaration insurance page in your records where it’s easily accessible. Additionally, your auto insurance declaration can be helpful if you want to shop around for auto insurance rates.

When you’re ready to shop for auto insurance, SoFi can help. Our online auto insurance comparison tool lets you see quotes from a network of top insurance providers within minutes, saving you time and hassle.

Photo credit: iStock/Drazen_

Auto Insurance: Must have a valid driver’s license. Not available in all states.
Home and Renters Insurance: Insurance not available in all states.
Experian is a registered trademark of Experian.
SoFi Insurance Agency, LLC. (“”SoFi””) is compensated by Experian for each customer who purchases a policy through the SoFi-Experian partnership.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Supplemental life insurance is typically an additional policy that you can purchase to augment the group life insurance policy obtained via your employer.

These policies can provide extra peace of mind when it comes to protecting your loved ones, but is more insurance always better? You may wonder whether purchasing this kind of policy is a good idea or not worth the added expense. Let’s take a closer look to see whether supplemental life insurance makes sense for your situation.

Understanding Supplemental Life Insurance

Supplemental life insurance is a policy taken out in addition to basic coverage, which might be term or permanent life insurance. You can often purchase a supplemental policy through an employer to augment what they offer as an employee benefit. However, these policies don’t have to be secured through your job. We’ll learn more about that in a minute.

Some of these policies come with a death benefit, a lump sum payment that goes to the beneficiaries you’ve named (the loved ones who will inherit the money). Others may be a different kind of policy; say, one that pays funds that are earmarked to pay for funeral expenses. Depending on the details of your life, these add-ons may be an inexpensive way to boost your protection and sense of security.


💡 Quick Tip: With life insurance, one size does not fit all. Policies can and should be tailored to fit your specific needs.

Do You Need Supplemental Life Insurance?

Deciding whether or not to buy a supplemental policy is a very personal decision. To help figure out the right answer for your situation, it may help to ask yourself and answer a few questions. Let’s consider some of those here.

Does Your Employer Provide Life Insurance?

Because supplemental insurance is meant to enhance the life insurance policies you already have, check to see if your employer offers basic life insurance as a benefit. If so, how much? Many times, employers offering this insurance will provide a multiple of the employee’s current salary. Other times, it’s significantly less — $10,000 to $25,000 worth of coverage is common. Those are figures that many people will find too low to provide the kind of protection they’d like.

If you feel you don’t have enough protection, you may want to look for ways to boost your coverage so that in a worst-case scenario, you know your loved ones will have enough money to cover their expenses. Perhaps your employer offers supplemental policies that will get you to the level of life insurance coverage that you desire. Otherwise, you can also look on the open market for primary or supplemental policies.

Have Your Compared Life Insurance Rates?

If you haven’t compared prices of life insurance rates in a while (or ever), you might want to give it a try. Just because an employer offers life insurance, including supplemental coverage, you may not want to buy it. You may discover that you can get enough life insurance through a standard policy without adding a supplemental one.

You can quickly get quotes by calling an insurance agent or, to save even more time, from a website that provides them from multiple companies. When looking at the quote that gives you the best coverage for the most affordable premiums, would you still need a supplemental policy? The answer may be no. There’s a good deal of competition in the marketplace and great deals to be found.

Recommended: How to Buy Life Insurance in 9 Steps

How Is Your Health?

First, let’s understand that your health rating is a key factor in buying life insurance on the open market. Rates tend to be lower when you are healthier and younger. Health is typically assessed by the insurer asking you questions about your medical status and possibly having you submit to a brief health exam that involves the collection of blood and urine samples.

While plenty of life insurance policies require health exams and/or medical records, many insurers also offer lab-free options that don’t require medical exams (although you’ll almost certainly need to answer health-related questions). These are often the kind employers offer employees. Typically, these policies are for people who fit into certain age groups and other categories in which they’re likely to be healthy. These lab-free policies are often available for up to $1 million.

Now that you know how this works, understand the implications of your health status. If you have an underlying health condition, are a smoker, or have other qualifying factors, you would probably pay more for life insurance if you went shopping on the open market. In these cases, buying a supplemental policy through your job could be a good way to get coverage at a relatively low cost.

Do You Need Portable Coverage?

Before you sign up for a supplemental policy, consider whether it’s portable. “Portability” is your ability to keep certain benefits if you switch your place of employment or leave the workforce entirely — in this case, your life insurance. If you’re thinking about changing jobs or have reason to believe that you may not work at your current employer for much longer, it’s important to know if your life insurance is portable.

How Much Supplemental Life Insurance Should You Buy?

A common recommendation is to carry 10 to 15 times your annual income in life insurance coverage. Your goal is to choose a policy that would replace the income you would have brought in if you weren’t around to provide for your family. So, if you multiply your salary by those numbers and then subtract what you have in your “regular” life insurance policy, that can be a starting point to determine how much supplemental insurance makes sense.

If you make $50,000 a year and multiply by 10 or 12, that’s $500,000 to $600,000 in coverage you want to purchase. (You might want to bump it up a bit to account for inflation.) So, if you have a term life insurance policy for $500,000, you might decide to get a supplemental policy for $200,000.

Now, factor in your outstanding debt. Life insurance payouts can be used to pay them off, including mortgage loans, car loans, student loans, credit cards, and so forth. So, if you have these debts, you can add their outstanding balances up and consider adding those amounts to your life insurance needs. If, for example, these debts total $300,000, you might bump up the supplement policy example above to $500,000.

Recommended: Life Insurance Definitions

Types of Supplemental Life Insurance

We’ve been focusing on one kind of supplemental insurance, a popular option that lets you increase the overall life insurance coverage you own. This kind of policy would pay a lump-sum death benefit to your beneficiaries. If you purchase this, it’s an employee benefit that can increase the amount of coverage that you own (although you may be responsible for part of all of those premiums albeit at a group rate).

But let’s consider some other possibilities that may be offered:

•   Supplemental spouse life insurance. This kind of insurance provides a death benefit if the employee’s spouse dies and may also be called supplemental family life insurance. Employees may also have the option to buy supplemental child life insurance to cover the death of a child or other dependent who qualifies.

•   Accidental death and dismemberment. This provides coverage to your beneficiaries if you are killed or lose physical function in a type of accident that’s covered in the policy. Depending on the kind of work you do or the pastimes you pursue, this may or may not suit your needs. With AD&D insurance, you could receive a benefit, say, if you were to lose your eyesight, your hearing, or limb in an accident. But it won’t provide any benefit if you die due to other medical conditions, which are more likely to occur.

•   Final expenses. These policies pay a small benefit (typically between $5,000 and $35,000) to cover end-of-life expenses, such as funeral and burial costs. Some people like to have this kind of coverage, which means your loved ones wouldn’t have to pay out of pocket for these charges.

How Much Coverage Can You Get Through Work?

It’s worthwhile to evaluate what life insurance options are available through your work. Employers may offer lower rates since they get a group insurance rate. Also, it’s also possible that your employer would pay part of your premiums. It’s typically easier to get insured through a group plan. While you may need to answer medical questions, it’s less likely that you’ll need a medical exam for group insurance.

Group plans through your employer, though, are usually not portable. This means that if you leave that employer, the coverage ends and then you’ll need to shop around again — now at an older (although not necessarily old) age and perhaps with new health conditions. Plus, these plans aren’t as customizable as you might get on your own.

How Much Does Supplemental Life Insurance Cost?

If your employer offers this benefit as part of a group policy, the cost may be minimal, especially if the workplace subsidizes the premiums.

Otherwise, it can make sense to get personalized quotes, given that age, gender, health conditions, amount of the policy, term, and more can impact the price. There are online calculators that can help you do the math and see how the numbers add up.


💡 Quick Tip: Term life insurance coverage can range from $100K to $8 million. As your life changes, you can increase or decrease your coverage.

The Takeaway

To recap: What is supplemental life insurance? It’s a policy that enhances a person’s primary life insurance policy. It helps to ensure that they have enough financial benefit to protect their loved ones if they weren’t there to provide for them.

While supplemental policies through your employer can be affordable, they may not deliver the level of coverage you need. Take a close look at your options, and take advantage of the simple online tools that can help you find the kind of policy you need at the right price.

SoFi has partnered with Ladder to offer competitive term life insurance policies that are quick to set up and easy to understand. Apply in just minutes and get an instant decision. As your circumstances change, you can update or cancel your policy with no fees and no hassles.

Photo credit: iStock/Kemal Yildirim

Coverage and pricing is subject to eligibility and underwriting criteria.
Ladder Insurance Services, LLC (CA license # OK22568; AR license # 3000140372) distributes term life insurance products issued by multiple insurers- for further details see ladderlife.com. All insurance products are governed by the terms set forth in the applicable insurance policy. Each insurer has financial responsibility for its own products.
Ladder, SoFi and SoFi Agency are separate, independent entities and are not responsible for the financial condition, business, or legal obligations of the other, SoFi Technologies, Inc. (SoFi) and SoFi Insurance Agency, LLC (SoFi Agency) do not issue, underwrite insurance or pay claims under LadderlifeTM policies. SoFi is compensated by Ladder for each issued term life policy.
Ladder offers coverage to people who are between the ages of 20 and 60 as of their nearest birthday. Your current age plus the term length cannot exceed 70 years.
All services from Ladder Insurance Services, LLC are their own. Once you reach Ladder, SoFi is not involved and has no control over the products or services involved. The Ladder service is limited to documents and does not provide legal advice. Individual circumstances are unique and using documents provided is not a substitute for obtaining legal advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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