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| Frequently Asked Questions About Term Life Insurance |
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Term Life Insurance Made Easy |
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- What is term life insurance?
- What are the benefits of Level Term vs. Yearly Renewable Term?
- What can term insurance do for me, my family and my business?
- How is an individual rated?
- What riders are available?
- Reasons NOT to by term insurance.
- How much does it cost?
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Term is the lowest cost life insurance product available. When you buy term life, you are
purchasing "pure" insurance which typically does not include a cash value or a savings
feature. Term Life insurance, as the name implies, is purchased for a particular "term" or
length of time. Once the term period has arrived, and you do not convert your term policy
to a "permanent''type, your life insurance policy will expire. If the insured dies within the "term
period," the predetermined death benefit will be paid to the beneficiaries.
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Level term insurance includes low premiums and a steady coverage over the term of the
policy. In other words, your premiums do not go up and your coverage does not go down as
long as your premiums are current. "Annual" or "Yearly Renewable Term" offer the lowest
initial cost life insurance available. Premiums for this type of life policy will start out very
low; however, the premiums will increase each year. In general. Yearly Renewable Term
policies are most efficient during the first 3 to 4 years. If you plan to keep your policy for longer
than 3 or 4 years, you should consider Level Term.
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Term insurance is bought by millions of people for a number of reasons. Families use term for
security. In case the insured passes away, your Term policy insures there will be money to use
to pay for your home, college, outstanding loans and other major expenses. Small Business
Owners use Term insurance as low cost debt protection to cover notes, lease obligations,
business real estate mortgages and other expenses. Business Partnerships often use
Term Insurance to buy out partners in the event of their death. For example, the deceased's
beneficiary gets the insurance proceeds and the ownership in the company is then transferred to
the remaining partner(s).
Corporations use Term as stock purchase redemptions. In this case, the corporation gets
the insurance proceeds and buys back the stock from the deceased's beneficiaries with no
negative cash flow impact on the company.
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Individuals are rated by their age, health history and in some cases, by their careers. Younger
people generally have lower premiums. For a quote go to our Term Quote
page.
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Riders or options are available with some policies. These may include:
A: Waiver of Premium Rider (WPR)
If you become totally disabled prior to age 60, the premiums are waived.
B: Accidental Death Benefit Rider (ADB)
If the insured dies from accidental death prior to age 70 then an additional amount is paid.
C: Child Protection Rider (CPR)
You may add your children to the policy. The premium is the same no matter how many children are covered.
D: Accelerated Benefit Rider (ABR)
This allows a one-time lump sum payment of up to 25% of the base policy benefit, with maximums
typically of $25,000 for terminal illness with less than six months to live, major organ
transplant (heart, lung, liver, pancreas) or nursing home confinement for the remainder of
life.
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Term life is a good choice for many people, but NOT for the following reasons:
A) To fimd expected federal and/or state estate obligation.
B) To fund an irrevocable life insurance trust.
C) To fund trusts for the purpose of providing an estate.
These reasons would be better served with permanent life insurance, either whole life or
universal life. We suggest you seek counsel from either your estate attorney, financial
planner, or your CPA.
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Rates vary by company with a multitude from which to choose. To get a
personalized quote go to our Term Quote
page to get a quote from top companies.
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Get A Quote |
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