Understanding Global Life Insurance Payouts: How It Works

Global Life Insurance offers valuable financial protection for employees and their beneficiaries in challenging times. To help you understand how the payout works, we've provided scenarios and explanations below:

Scenario 1

Let's consider an employee who has an annual salary of $50,000. The company selected the Global Life Insurance plan with a cover limit of $400,000.

• Life Insurance: If the employee passes away, their beneficiary will be compensated as follows:
  • The compensation is 6 times the annual salary. For an annual salary of $50,000, this amounts to $300,000.
  • Though the coverage limit is $400,000, the beneficiary will receive the calculated amount of $300,000, as it's below the limit.

• Accidental Death & Dismemberment (AD&D): If the employee unfortunately dies or gets dismembered due to an accident, their beneficiaries can receive compensation. Here's how it works:
  • The payout is 5 times the annual salary. For an annual salary of $50,000, this is $250,000 ($50,000 x 5)
  • Even though the coverage limit is $400,000, the maximum compensation in this case would be $250,000.
  • The exact amount paid depends on the type of injury, based on the Accidental Dismemberment Table.
  • The employee or beneficiary will receive a percentage of the $250,000, as per the table's guidelines.

• Permanent Disability (PD): If the employee becomes permanently disabled, either fully or partially, they or their beneficiaries will be compensated. Here's how it works:
  • The compensation is 5 times the annual salary. For an annual salary of $50,000, this amounts to $250,000.
  • Even if the coverage limit is $400,000, the potential payout in this situation is capped at $250,000.
  • The insurance company will evaluate the severity of the permanent disability to decide the final compensation. Based on the disability degree:
    • Less than 33.33% Disability: No compensation.
    • Between 33.33% and 66.67% Disability: Compensation is the rate of disability multiplied by $250,000.
    • Over 66.67% Disability: Full compensation of $250,000.

Scenario 2

Now, let's consider another employee, who has an annual salary of $100,000. The company also selected the Global Life Insurance plan with a cover limit of $400,000.

• Life Insurance: If the employee were to pass away, their beneficiary will be compensated as follows:

  • The payout is 6 times the annual salary. For an annual salary of $100,000, this would be $600,000.

  • However, because the coverage limit is $400,000, the beneficiary will receive only up to this limit, which is $400,000.

• Accidental Death & Dismemberment (AD&D):If the employee is involved in an accident resulting in the employee's death, dismemberment, or permanent disability:
  • The payout is 5 times the annual salary. For an annual salary of $100,000, this amounts to $500,000 ($100,000 x 5)

  • However, since the coverage limit is $400,000, the maximum compensation in this case would be $400,000.

  • The exact amount paid depends on the type of injury, based on the Accidental Dismemberment Table.
  • The employee or beneficiary will receive a percentage of the $400,000, as per the table's guidelines.

• Permanent Disability (PD): If the employee suffers from permanent or partial disability:
  • The compensation would be 5 times the annual salary. For an annual salary of $100,000, this would be $500,000.
  • However, as the coverage limit is $400,000, the beneficiary can only receive up to this amount.
  • The insurance company will then evaluate the extent of the permanent disability to decide the exact compensation. Based on the disability's severity:
    • Less than 33.33% Disability: No payout.
    • Between 33.33% and 66.67% Disability: Compensation is the disability rate multiplied by the $400,000 coverage limit.
    • Over 66.67% Disability: Full compensation of $400,000 will be provided.

See also: How do claims for Accelerated Death, Accidental Dismemberment, Permanent Disability, and Life Cover affect total payouts and policy limits?