Posted: 2 Jan
Term Life Insurance Explained
Term Life Insurance is a type of insurance that does not have any cash value and the coverage will stay in force to age 80 or 85 with most companies. But the premiums will increase at the end of term you choose. If you choose Term 10, the premiums will increase every 10 years. You can choose the term from 10 to 30 years. The longer the term the higher the premium at the start of the contract. The term in term insurance is the period of time that the premiums will remain level. Term Life Insurance lets you choose the length of the term and the coverage amount. There is a lot to know about Term Life Insurance, and we are here to help.
Why Should You Buy Term Life Insurance?
Term Life Insurance is best for those who only have temporary life insurance needs. Especially Those:
- With a mortgage who want to ensure it can be paid
- With young children who need a large amount of coverage with low premiums
- Business owners wanting to insure a bank loan or their partners
How Much Life Insurance Do You Need?
One of the biggest things to consider is how much coverage you will need. There are a few things that influence this choice including the amount you would need to raise young children. Additionally, you’ll want to consider how much you owe on your mortgage and other loans. Who will be responsible for these payments when you pass away? The income your family will need to supplement in order to make payments and live should be of deep consideration.
Renewable vs Convertible
Renewable term life insurance automatically renews at the end of its term. The premiums will increase but the coverage will remain in force as long as the new premium is paid. Often at renewal of a term, insurance contacts you if you can qualify medically for a new policy that will be less expensive than the renewal premium on the old policy. Convertible, on the other hand, allows you to convert your term life policy to a permanent policy. The primary benefit is not having to pass a medical exam in order to receive permanent coverage. This means, if you are diagnosed with a serious illness, you won’t have to worry about being denied coverage.
Can You Be Denied?
All life insurance companies require that you qualify for the coverage and the qualification is based on your age and health history at the time of the application. Age will determine which term insurance policy you might be able to purchase. For example, if you’re 65 you won’t be able to get a 30-year term, but you may be able to get a 10-year term.
A common question is how much does term insurance cost? If you are a healthy non-smoking man age 40 you can get 1 million dollars of Term 10 coverage for less than 60 dollars per month. A better question is why you wouldn’t have Term insurance protecting those you love at this price? For a quote or a discussion, contact us today.