Throughout the life insurance industry, myriad terms are often used interchangeably, or entirely differently in one region vs. another. However, in the vast majority of states, life insurance units carry the same meaning with nearly every policy contract.
Units Into Dollars
One “unit” of life insurance usually equals $1,000 worth of coverage for most life insurance carriers. Some policies are arranged and sold in terms of coverage units, and premiums depend on the number of units requested.
Guaranteed Issue Products
Guaranteed issue life insurance policies present the most common instance, in which coverage is described in units as opposed to total face amount. Buying this type of product allows for easy increases or decreases in death benefits with the addition or removal of insurance units.
Children’s Term Riders
Aside from guaranteed issue life insurance policies, a rider on permanent products from traditional carriers is perhaps the only other place where coverage may be described in unit terms. Nearly every permanent life insurance policy permits the addition of a Child Term Rider, which is little more than final expense coverage. Child Term Riders added to permanent policies typically involve choosing an appropriate number of units from one to 10, with 10 units equaling $10,000.
- WholesaleInsurance.net: Graded Benefit Life Insurance
- Statistica. "Perceived level of life insurance coverage in the United States in 2016, by age (login required)." Accessed May 21, 2020.
- A.M. Best. AMB Rating Disclosure Form: AIG Speciality Insurance Company. Accessed October 20, 2020.
- A.M. Best. AM Best Affirms Credit Ratings of Massachusetts Mutual Life Insurance Company and its Subsidiaries. Accessed October 20, 2020.
- A.M. Best. AM Best Affirms Credit Ratings of Aegon N.V.’s U.S. Subsidiaries. Accessed October 20, 2020.
- Centers for Disease Control and Prevention. "Life Expectancy." Accessed May 21, 2020.
Gregory Gambone is senior vice president of a small New Jersey insurance brokerage. His expertise is insurance and employee benefits. He has been writing since 1997. Gambone released his first book, "Financial Planning Basics," in 2007 and continues to work on his next industry publication. He earned a Bachelor of Science in psychology from Fairleigh Dickinson University.