Term life insurance has been a popular choice for many consumers due to its flexibility and cost. Just as any insurance would be, term life insurance can get complex and there are a few things you many want to consider before diving right in.
Think about what events may happen in your life in the next 30 years:
- You could get married
- You could purchase a house
- You could have children
- You could approach retirement
All of these events come with a price tag, maybe even a loan. Term life insurance could offer you and your family financial protection during all the major stages of your life. Let’s look into the details and considerations.
WHAT IS TERM LIFE INSURANCE?
Term life insurance is just what it sounds like – life insurance for a specific amount of time, usually one to 30 years. These policies are typically bought for financial protection at a certain time in someone’s life such as buying a new house or having a child. Many companies may offer additional add-on insurance, such as an accidental death benefit, to ensure the coverage is meeting the needs of the customer.
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WHAT COULD TERM LIFE INSURANCE COVER?
Among other things, term life insurance is there to help protect your family if you were to pass during a specific timeframe in your life. It could be used to help:- Your family pay for the mortgage in your absence
- Supplement income for your spouse while they mourn your loss
- Provide a financial head start for your children to use for college or a wedding
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WHAT ARE THE BENEFITS OF A TERM LIFE INSURANCE POLICY?
You’ll find a few advantages of a term life insurance policy, including:- Cheaper than Permanent Insurance:
Many people find term life insurance attractive because of the cost. Since the time frame isn’t longer than 30 years, premiums could be less expensive than those of a whole life policy.
- Cheaper than Permanent Insurance:
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WHAT HAPPENS AFTER THE TERM ENDS?
To keep your coverage after your term life insurance policy ends, you have three options:-
Renew the Policy:
Before purchasing your policy, you’ll want to see if the policy is renewable. This is a clause in term life policy that allows the policyholder to extend the coverage timeframe without having to re-qualify for coverage. Factors affecting this feature may include on-time premium payments and renewal premiums being paid. -
Choose a Lower Term:
Another option for keeping coverage in force is to apply for a new term life policy. You can either apply to the same company, or you can choose a different company. Regardless, both applications will likely require an exam to show you are still in good health. -
Convert it to Permanent Insurance:
Most term insurance policies include a conversion/exchange option. This allows you to convert your term life policy to a permanent life policy like whole life. Be sure to check with your insurance company to see which policies are available for conversion. Common guidelines for a conversion may include:- Entire term allows you to convert your policy any time during the policy’s lifespan
- Period term allows you to convert your policy for a certain period such as the first five years of the policy term
- Entire term allows you to convert your policy up until a specific age, typically age 70
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Renew the Policy:
Keep these options in mind during your initial application process. You can get more information from a licensed insurance professional.
Categories: Insurance, Life Insurance, Term Life Insurance