What is TERM LIFE insurance?
There are essentially two categories of life insurance:
- The category of TERM LIFE INSURANCE is so-named because it is designed to last a specified period of time – a term. For instance, you have a TERM in school. A politician has a TERM in office. For Term Life Insurance it could be a 5-year term; or a 10-year term; all the way up to a 40-year term. However, most terms are 10 year, 20 year, and 30-year term policies. The monthly cost of TERM LIFE is much less than WHOLE LIFE. For example, a $250,000 20-year term policy for a 45-year old male would run about $35 per month, whereas a permanent policy would range from 3-5X that amount.
- The category of WHOLE LIFE INSURANCE is the opposite of term life. It is sometimes called PERMANENT INSURANCE. It is designed to last a lifetime. A great benefit of WHOLE LIFE is that it accumulates cash for you over your lifetime. The monthly cost is also higher.
So, if cash is tight yet you want to protect your family from your unexpected death, term life may be your best choice; it’s certainly the quickest.
Typical features of TERM life policies:
Generally, the shortest term available is a 5-year term life policy. I’ve even seen one for a SINGLE year. However, term life plans are available for up to 40 years.
The monthly premium is usually FIXED for the entire term you have selected. No rate increases!
Most plans are guaranteed renewable after the term is over, so as long as you continue to pay the premium (probably at a higher rate when the TERM ends) the plan cannot be cancelled even if your health status may change. In many policies, be aware that there is usually a 2-year suicide clause, meaning that if you commit suicide in the first two years the death benefit will not be paid.
Convertible – the ability to convert the term life into a whole life policy is another popular option in most plans.
Accelerated death benefit – most plans today have a great feature included that will ADVANCE half the death benefit to you should you be diagnosed with a terminal illness and are expected to die within 12 months.
Now That You Know the Answer to “What is Term Life Insurance,” is a TERM policy right for you?
Before buying any life insurance you should discuss your intentions as well as your goals with us so we can help determine which type of plan is appropriate to meet your needs. Everyone’s need is different.
Call and let’s talk or send me an email and ask for a comparison of the different policies available today.