Term Life
Protecting your loved ones every step of the way
What Is Term life insurance ?
Keep your family financially stable if you pass away with term life insurance. Available in 10-, 20- and 30-term periods, this coverage is a cost-effective way to ensure your household income remains stable. It’s also straightforward, providing your loved ones with an agreed-upon lump sum of cash if you pass away before the policy’s term ends.
Term life insurance is a type of insurance that provides coverage for a specific time frame. For example, most insurance companies will provide term coverage for 5, 10, 20, 25, 30 years. If the insured person dies within the period specified in the policy and is in force, the death benefit would be paid. However, if the person is alive after the fixed term period, the premium will increase.
Benefits of Term insurance
The cost of term insurance is probably one of the most significant factors of why individuals get this type of coverage. Term insurance premiums are initially low compared to other types of life insurance, making it an affordable option for younger individuals.
Features of Term insurance plans
Most insurance companies will offer term insurance policies that are renewable and convertible. Renewable means at the end of the term, the policy will automatically renew to another term period. Convertible means that you can convert the term policy to whole life or universal life insurance coverages. Riders such as; A child rider, Disability waiver, Accidental Death & Dismemberment, Guaranteed insurance riders can be added to the insurance policy.
Types of term insurance plans
There are many types of term insurance policies available. Most policies will offer a level of death benefits and premiums for the duration of the policy, such as 10, 20, or 30 years terms.
When is the right time to buy term insurance?
This right time to buy life insurance is when you are young and healthy, have a high debt load, and have dependents.
How much term insurance cover do you need?
Here are a few things to take into consideration in determining the coverage amount;
– Look at your total liabilities – i.e., mortgage, lines of credit, credit card balances, car loans, etc
– Look at your future cash flow needs – i.e., children’s future education needs.
– Final expenses – i.e.; funeral expenses and final tax return
– Income needs – the insurance payout should also replace a percentage of income so that the survivors can maintain their current standard of living.
You calculate all these amounts to determine how much term insurance coverage you will need.
The beneficiaries of life insurance payout usually have the following options; one-time lump sum payment, installment payment, annuity payment or payout can be left with the insurance company in a simple interest account.
Factors such as smoking status, health, occupation and age, and gender will affect insurance premiums.Â
Riders on a term life insurance policy are optional term benefits that can be added to a policy. An example would be a child rider which provides temporary insurance for dependent children.
Individuals who have a young family, high debt load and limited cash flow are ideal for term life insurance.
Your financial needs will determine the type of life insurance coverage you should get. For example, an individual who needs insurance to cover their mortgage might consider a 20, 25 or even 30 year term life insurance coverage.
Older individuals who need insurance for final expenses or estate preservation should not get term life insurance.
The cost of term life insurance will depend on one’s age, health, gender and the coverage amount,
Term Life Insurance
PROS
- Cost effective coverage
- for young families with high
- debt load.
- Policy and coverage are simple
- to understand.
- Offers a lot of flexibility to your changing needs.
- Policy can be converted to
- permanent insurance.
- It is easy to cancel.
- Payout is tax-free
CONS
- X, It cost more at older ages and at each renewal.
- X No payout if you cancel your policy.
- X Does have a termination date
- X You will most likely outlive your term coverage.
What to do when you get your term life insurance policy?
In summary
Term insurance is a cost-effective way to provide adequate insurance coverage when you have a young family and a high debt load. It is essential to understand that term insurance is temporary insurance. It has no cash value, so there is nothing to get back if you cancel the policy. The premiums will increase at the end of each term period and will eventually terminate.
FAQ
Only under certain circumstances. If there is an error, for example with your date of birth, name, beneficiary information, etc., the insurance will accommodate such changes. Other changes might require you to complete a change form and approval from the insurance company.
The premium will not change during the term period. So for example, if you have a 20 year Term Insurance Policy, the premium will not change until the end of the term period.
Yes. Whether you die from sickness or accident, and if you policy is in good standing, the insurance company will pay out a claim.Â
It will primarily depend on your financial needs, what the term insurance is for and how long you will need the coverage and your affordability. For example, if you purchase a home at 50, you most likely will need term life insurance to coverage the mortgage period.
The death benefit payout is a tax free benefit. The premiums are not a tax deduction.
However, business owners, under specific circumstances are allowed to write off the premiums as a business expense.Â
Most insurance policies will last until the person who is insured reaches age 85. Of course, provided that the insured is still paying premiums and the policy is in good standing with the insurance company.
Yes, if you have smoked in the last 12 month, you would be considered a smoker.
Yes, if you have an inforce policy that is in good standing with the insurance company, your beneficiary(ies) will receive a payout.
Yes, you can purchase life insurance to cover such thing as final expenses.
This varies from one insurance company to another. Term plans can be purchased up to age of 70 or even 75.
Most insurance policies will last until the person who is insured reaches age 85. Of course, provided that the insured is still paying premiums and the policy is in good standing with the insurance company.
Yes, if you have smoked in the last 12 month, you would be considered a smoker.
Yes, if you have an inforce policy that is in good standing with the insurance company, your beneficiary(ies) will receive a payout.
Yes, you can purchase life insurance to cover such thing as final expenses.
This varies from one insurance company to another. Term plans can be purchased up to age of 70 or even 75.
