Term Life Insurance is one of the most common types of life policies that I help clients understand and purchase. Could it be right for you?
Simply put, Term Life provides financial protection only. There is no cash value component and Term policies will, generally, only provide that protection until you are age 70, 75 or 80. It’s considered temporary since it will only pay the death benefit if you die during the period the policy is in force. You die, the company pays. It’s a simple, straight forward contract.
What’s the benefit to considering Term Life if there is no cash value component? It is almost always the least expensive way to afford the greatest amount of protection. Young families with competing financial demands can benefit from getting their life insurance protection started this way. It is also ideal for the client who wants increased financial protection for only a limited time such as the lifetime of a home mortgage. Carefully chosen, Term insurance can be a good start to achieving your overall financial goals and give you options to build on.
Renewable Term Life will renew each year, without your health being re-evaluated, until the specified age cap. Level Renewable Term will have the same annual premium through a specified contract date such as for 10, 15, 20 or 30 years. After that the premium will increase each year but the policy will continue to renew, if you accept, until the maximum allowable age. This is why it’s “temporary” compared to “permanent” cash value products such as Whole or Universal Life which are designed to outlive you. The reason it is so inexpensive is because, statistically, you’re very likely to outlive your Term policy.
An important option to look for is Convertibility. If you purchase a Level Renewable & Convertible Term Life policy, you can convert any part or the entire benefit amount to one of the permanent types, usually at any point in the policy coverage, insuring not only your life but your future insurance options as well. It’s also important to consider a company that gives you a wide range of conversion options to choose from, not just one. You’ll pay a higher price the longer you wait to convert, based on age, but you will never have to have your health evaluated again unless circumstances have changed and it might benefit you.
If affordable protection is what you need right now, Term Life could be right for you. We can help you evaluate your needs and options. The one option we don’t want you to exercise is going without the protection your family needs. Life insurance is more affordable than most of our clients believe once we take a closer look!
