What Are Insurance Units?

by Gregory Gambone ; Updated July 27, 2017
Insurance units describe a fixed dollar amount of life insurance coverage.

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.

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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.

About the Author

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.

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