What Is The Best Term Life Policy
Theres no one-size-fits-all policy. The best way for a client to determine the ideal term life insurance policy is to have an open, honest dialogue with an insurance agent. Agents have the experience to help make sure a familys financial needs are protected. At Transamerica, we want to make it as easy as possible to find the life insurance policy that suits their specific needs.
Types Of Voluntary Life Insurance
Overall, the different types of voluntary life insurance include the following:
Voluntary term life – This affordable plan covers a set amount of time and works best when purchased at a younger age.
Voluntary permanent life – Whole life insurance offers higher premiums than term life, but the premiums also don’t increase, which can be good if you’re looking for long-term life insurance coverage.As part of their voluntary life insurance policies, some companies will offer whats called guarantee issue.
If you meet certain criteria, such as signing up during your companys enrollment period and actively working at the time of application, you can qualify for guarantee issue. It provides life insurance automaticallyup to a certain amount of coveragewithout requiring you to take a medical exam or answer health-related questions to receive coverage. Guarantee issue can be a lifesaver for individuals who are worried that they may be denied coverage due to underlying medical conditions.
However, if you need coverage above the guarantee issue, you will need to submit to a medical questionnaire and a potential physical exam. Your spouse and dependent children may also receive partial coverage through guarantee issue.
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How To Determine The Amount You Need And Where To Get It
If you have a young family, it will take many years of income to pay to feed, house, clothe, and educate your children through to adulthood. If youre not there to provide for them, life insurance can help with those costs but you have to make sure your policys death benefit is enough to do so. Here are a few general rules people use to help determine how much they need:
1/2 times net worth
Any of those methods is a good start, but it also makes sense to talk with an experienced professional who can guide you through the process of calculating your actual need.
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Medical Expenses Or Long
Most life insurance policies offer an accelerated death benefit rider that allows the policy owner to access a portion of your death benefit before you die if you are diagnosed with a terminal illness. That could help you pay medical or other expenses related to long-term care during a time when you cant work. Suffice it to say, this can be a huge expensenot to mention a hassle, during a time thats already stressfulto take on without help. But please note, any funds tapped by the accelerated death benefit rider will reduce the overall death benefit once the policyholder passes away.
What Is The Difference Between Term Life And Whole Life Insurance
Term life insurance occurs over a predetermined period of time, typically between 10 and 30 years. Term policies may be renewed after they end, with premiums recalculated according to the holders age, life expectancy, and health. By contrast, whole life insurance covers the entire life of the holder. Unlike a term life policy, whole life insurance includes a savings component, where the cash value of the contract accumulates for the holder. Here, the holder can withdraw or borrow against the savings portion of their policy, where it can serve as a source of equity.
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Should They Buy Term Life Insurance
Term life insurance or any life insurance policy, for that matter may be beneficial, especially for those who want to help protect their family after they’re gone. If they’re looking for coverage for a specific time period, such as 10 or 20 years, term life is a good option. It also may be more affordable than other types of life insurance.
Choosing The Right Term Life Policy
Figuring out which term length you should buy requires a review of your debts, financial needs, dependents’ needs and when all those responsibilities might change. When will your dependents reach financial independence? What are your major debts, such as mortgages or other loans? When must they be paid off?
It’s a good idea to review your life insurance needs carefully, both when you buy a policy and when you experience a major life change. To stay on top of your life insurance needs, you should:
- Review your circumstances. Think about your situation yearly. If you already have a policy, read your life insurance policy to make sure it still provides appropriate coverage.
- Shop around. Life insurance quotes vary considerably among insurers. Do your homework.
- Sweat the fine print. An insurance policy is a legal document. Read it carefully and make sure that you understand it before signing anything.
- Be truthful. Answer all application questions accurately. Insurance fraud is a serious crime and companies treat it as such. You don’t want to die and then have the insurer deny your loved ones a death benefit because you lied on your application.
- Maintain your list of beneficiaries. Dont wait to change them when its necessary. And tell your beneficiaries about the insurance don’t pay for a policy that your heirs can never claim because they don’t know about the policy or the name of the insurer.
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How Much Is Term Life Insurance
Your term life insurance cost will depend on a number of factors including the underwriting requirements of the insurance company you choose.
Your life insurance company will assess your health profile and assign you a rating, such as Standard or Preferred. Some of the factors that affect your rating and your premium include:
- Your age and gender
- Your medical questionnaire or medical exam
- Amount of death benefits you want
- Length of the term you choose
As an example, a 35 year-old female non-smoker would be given a Preferred rating and could expect to pay $30 to $40 a month for a 20 year, $500,000 term life policy. By contrast, a 50-year-old male smoker would be given a Standard rating and could expect to pay $500 or more per month for the same 20-year, $500,000 term life policy.
The cost of term life insurance will vary widely based on your age, health and other personal factors, as well as from one life insurance company to another.
For this reason, it is important to work with an insurance agent who specializes in life insurance. An independent agent will present options from multiple life insurance companies and can get the help you need to make the best decision for your needs.
How Much Term Life Insurance Should You Purchase
As the insured, you can select an amount that meets your needs. The amount needed usually takes into account providing for someone if you pass away. If small children will be the beneficiaries, you may want an amount that would cover your lost income for the number of years until they turn 18 or graduate from college.
Some other items to consider in the amount of the policy include:
- College expenses for children
- Outstanding debt
- Funeral expenses
The GEICO Insurance Agency and our partners can help you get a policy that meets your needs. Get a life insurance quote online or call us at .
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How Much Life Insurance Do You Need
If youre purchasing term life as a form of income replacement for you or your spouse, the death benefit should reflect the capital your beneficiaries would need to cover living expenses and other financial responsibilities after your death. When calculating your insurance needs, factor in:
- your debt and financial obligations
- funeral expenses
- your company-sponsored health insurance
- services you provide your family
Once you have determined how much annual income your dependents would need, multiply that amount by the number of years they need financial protection. Some experts recommend purchasing from 10 to 12 times your annual income in life insurance coverage, but this calculation doesnt consider inflation.
Term vs Whole Life Insurance
Heres how term life insurance stacks up against whole life insurance, a leading form of permanent insurance:
|Term Life Insurance|
|Single-purpose product that provides a death benefit with an expiration date||Offers a guaranteed death benefit, as well as a savings or investment component|
|Protects for a limited time from 1 to 30 years, or up to a specific age limit||Does not expire as long as you keep up with premium payments|
|Features lower premiums but has no cash value||Premiums are high, but cash value may be used as retirement income or to cover premium payments|
What Happens To A Life Insurance Policy With No Beneficiary
There are two additional scenarios where the death benefit payout can get tricky: if you donât list any beneficiaries in your life insurance policy or if your beneficiaries predecease you.
If you donât choose any primary or contingent beneficiaries:
If you donât list any beneficiaries in your policy, the benefit goes to yourestate instead, making it difficult for your children or other dependents to receive payments.
Not selecting beneficiaries can significantly slow down the disbursement of life insurance benefits because the payout is then subject to probate, where the courts determine who should get your assets. Your intended beneficiaries may also have to pay estate taxes on the life insurance benefit if it goes to your estate.
If your beneficiaries predecease you:
Ifyour beneficiaries die before you, the same obstacles will apply as if you didnât select beneficiaries at all â your life insurance benefit will be paid out to your estate and your loved ones wonât receive any money.
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What Is Term Life Insurance And How Does It Work
Term life insurance offers a more affordable option than permanent life insurance for anyone looking to protect their loved ones against unexpected financial expenses upon their death. Read our guide on what is term life insurance to understand how it works, who its for, and how to get it.
Elements Of A Term Life Insurance Policy
Term life insurance policies consist mainly of a death benefit and a predefined term limit. The death benefit is the amount of money that goes to your beneficiary or beneficiaries if you pass away during the policys term limit. The term limit typically ranges between 5 and 30 years, with the most popular option being a 20-year term.
When purchasing a new policy, youll have to disclose details such as your age, height, gender, employment information, medical history, and lifestyle , for the insurer to determine your eligibility for coverage.
If you develop a terminal illness or severe chronic disease, you may not be able to renew your policy unless you have a guaranteed insurability rider.
Types of Term Life Insurance
There are three main types of term life insurance policy: level term insurance, decreasing term insurance, and renewable term insurance.
Term life policies provide whats known in the industry as a death benefit. If you die within the policys term, your beneficiary will receive a lump-sum payment for the amount specified within your contract.
Duration of Coverage
Term life insurance coverage typically lasts for a specific period of time, although some companies offer policies that are renewable annually. Once the term ends, you can then renew the policy, turn it into a whole life policy, or simply allow it to lapse.
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How Term Life Insurance Works: The Basics
Term life is typically less expensive than a permanent whole life policy but unlike permanent life insurance, term policies have no cash value, no payout Policy structure and provisions: Relatively simPremium: Can be level or increase over the leLength of coverage: Typically, 10 30 yearsInitial cost: Typically, lower than whole life
Examples Of Term Life Insurance Rates
*Rates reflect policies in the Preferred Plus Rate Class issues by American General
|$250,000 coverage at a Preferred Plus Rate|
Read more of what our customers have to say and see their Life Insurance Customer Satisfaction Scores.
The endorsements/testimonials presented should not be construed as a recommendation to purchase, or an indication of the value of any product or service. The testimonials are actual AIG Direct customers who are not affiliated with AIG Direct and were not provided compensation.
This material is general in nature, was developed for educational use only, and is not intended to provide financial, legal, fiduciary, accounting or tax advice, nor is it intended to make any recommendations. Applicable laws and regulations are complex and subject to change. Please consult with your financial professional regarding your situation. For legal, accounting or tax advice consult the appropriate professional.
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Why Buy Term Life Insurance
Term life insurance is purchased to replace your income if you die, so your loved ones can pay debts and living costs.
For example, if you and your spouse own a home and you were to die tomorrow, your spouse would have to pay the mortgage on his or her own. If you have a term life insurance policy, your spouse may receive enough money from the policy’s death benefit to pay off or at least keep up with the mortgage.
Because of its low cost, compared to other types of life insurance, term life is a popular life insurance choice.
Cameron Ellis, an assistant professor in the Department of Risk, Insurance, & Healthcare Management at the Fox School of Business at Temple University, notes that buying life insurance is about gaining “peace of mind.”
Ellis stresses that life insurance covers your family against lost income by a primary wage earner.
Fabric said people choose life insurance for their loved ones’ financial security, including protecting their children’s financial future. When deciding on life insurance, think about who you’re covering and the most important financial goals. That will help you choose the right beneficiary and coverage amount.
Convertible Term Life Insurance
Many insurers offer convertible term life insurance policies. This type of insurance allows you to convert the term policy to a permanent life insurance policy without going through a new medical review.
We recommend having a convertible term policy as your financial situation will change over time. For example, if your income rises and you later decide that you want a permanent life insurance policy to take advantage of the tax benefits, that option will be available.
As having a convertible policy doesn’t change the insurer’s risk while maintaining the term policy, it shouldn’t increase your premiums and is generally just beneficial as it offers convenience should your financial situation change. Just make sure to note the period of time during which you’re allowed to convert the policy.
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How To Buy Term Life Insurance
When you want to buy term life insurance, evaluate your familys financial needs and the length of time you want the coverage. Term life insurance is especially vital if you are the primary earner in your household and have dependents or are starting a family.
Working with an agent can help you make these important determinations:
- Annual renewable: This means you buy a term life insurance policy which is renewed every year up to a specific amount of years.
- Guaranteed renewable : This type of term life is set for a specific period of time and your premiums are guaranteed for that period.
Once you make these determinations and review quotes, you will need to complete an application which you or your agent will submit to the life insurance company. The life insurance company will review the application and may require you to take a medical exam.
An independent agent in the Trusted Choice network will help you to evaluate your options, compare quotes and complete the paperwork needed to get the life insurance policy that is right for you.
What Types Of Term Life Insurance Are Available
EZ Term® Life InsuranceEZ Term® Life Insurance is a great option for younger people with limited budgets. This policy can help cover student loans, funeral costs, credit card debt, etc. It features:
- $50,000 of coverage until age 40
- Premiums that remain the same throughout the life of the policy
- The ability to convert to a permanent policy any time before age 40 without proof of good health**
Level Term Life InsuranceLevel Term Life Insurance is a more affordable option for many young families with a mortgage, taxes, daily living expenses, credit card debt, and other types of expenses related to starting a family. It features:
- A Guaranteed Death Benefit of $100,000 or more as long as premiums are paid when they are due.
- Level term options of 10, 20 or 30 years
- The ability to convert to a permanent policy during the conversion period without proof of good health*
Shelter Express Term® Life InsuranceIf you are between the ages of 18 and 60, in good health, don’t have a dangerous job or dangerous hobbies, and want to purchase term life insurance without taking a physical exam, the Shelter Express Term® Life Insurance may be perfect for you. Some key features of this policy include:
- Coverage available in $50,000, $75,000 or $100,000 amounts
- Premiums remain the same for 30 years or to age 65, whichever comes first
- Guaranteed Death Benefit to age 95 as long as your premiums are paid when they are due.
Shelter Life Insurance Company, 1817 West Broadway, Columbia, MO 65218
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