Term Life Insurance - How It Works
Term life insurance provides protection for a specific period of time with guaranteed premium rates and is the least expensive form of life insurance. Term periods and rate guarantee periods typically range from 10 to 30 years, with 20 years being the most common term period.
Lets take a look at the ADVANTAGES OF TERM LIFE INSURANCE. It has lower initial cost in comparison to permanent insurance. You just paying for the death benefit. There is a lump sum payment to your beneficiaries if the policy is in-force. It is a good choice for people in their family-formation years for covering "needs" that will disappear in time.
WHEN THE LEVEL TERM PERIOD ENDS - WHAT HAPPENS? If you buy a term policy only to realize at the end of the guaranteed level term period that you still have a need for life insurance? Most policy contracts will give you the option to convert your contract when you reach the end of the level term premium period. When converting to permanent contract or extending your current term contract to annually renewable term, higher premium costs will prevail due to your current age and health condition. If your health has deteriorated, you may find that it's much too expensive to convert your policy or you may not even be insurable. Your only option may be to continue to pay premiums on an annual renewable basis. Most term life insurance policies will renew to age 90 or 95 as long as premiums are paid.
WHAT KIND SHOULD BE BOUGHT AND HOW MUCH? Ask yourself, how much coverage will be needed now and in the future? Which type, term or permanent best fits your needs and budget and how long do you want to lock in guaranteed premiums?
CONSIDER THE LIFE INSURANCE YOU HAVE NOW. If you are thinking about dropping a life insurance policy, here are some things you should consider: If you decide to replace your life insurance policy, don't cancel your old contract until you have received the new one. You then have a minimum period to review your new life insurance policy and decide if it is what you wanted. It may be costly to replace a policy. Much of what you paid in the early years of the contract you now have, paid for the company's cost of selling and issuing the contract. You may pay this type of cost again if you buy a new policy. Ask your tax advisor if dropping your policy could affect your income taxes. If you are older or your health has changed, premiums for the new policy will often be higher. You will not be able to buy a new policy if you are not insurable. You may have valuable rights and benefits in the contract you now have that are not in the new one. If the contract you have now no longer meets your needs, you may not have to replace it. You might be able to change your contract or add to it to get the coverage or benefits you now want.
Lets take a look at the ADVANTAGES OF TERM LIFE INSURANCE. It has lower initial cost in comparison to permanent insurance. You just paying for the death benefit. There is a lump sum payment to your beneficiaries if the policy is in-force. It is a good choice for people in their family-formation years for covering "needs" that will disappear in time.
WHEN THE LEVEL TERM PERIOD ENDS - WHAT HAPPENS? If you buy a term policy only to realize at the end of the guaranteed level term period that you still have a need for life insurance? Most policy contracts will give you the option to convert your contract when you reach the end of the level term premium period. When converting to permanent contract or extending your current term contract to annually renewable term, higher premium costs will prevail due to your current age and health condition. If your health has deteriorated, you may find that it's much too expensive to convert your policy or you may not even be insurable. Your only option may be to continue to pay premiums on an annual renewable basis. Most term life insurance policies will renew to age 90 or 95 as long as premiums are paid.
WHAT KIND SHOULD BE BOUGHT AND HOW MUCH? Ask yourself, how much coverage will be needed now and in the future? Which type, term or permanent best fits your needs and budget and how long do you want to lock in guaranteed premiums?
CONSIDER THE LIFE INSURANCE YOU HAVE NOW. If you are thinking about dropping a life insurance policy, here are some things you should consider: If you decide to replace your life insurance policy, don't cancel your old contract until you have received the new one. You then have a minimum period to review your new life insurance policy and decide if it is what you wanted. It may be costly to replace a policy. Much of what you paid in the early years of the contract you now have, paid for the company's cost of selling and issuing the contract. You may pay this type of cost again if you buy a new policy. Ask your tax advisor if dropping your policy could affect your income taxes. If you are older or your health has changed, premiums for the new policy will often be higher. You will not be able to buy a new policy if you are not insurable. You may have valuable rights and benefits in the contract you now have that are not in the new one. If the contract you have now no longer meets your needs, you may not have to replace it. You might be able to change your contract or add to it to get the coverage or benefits you now want.
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