Term Life Insurance.
40 %
of life insurance purchased is Term
Level Term Life
Provides a guaranteed death benefit and premium that does not change over the selected term length.
What Is Term Life Insurance:
Term insurance usually provides the largest amount of insurance protection at the lowest initial cost. For this reason, it’s the type most people start out with. Because term policies end at a specific point — the end of the term — they are best for providing protection for large needs with specific end points. For example, the parent of a young child may choose a 20-year term policy to provide protection until the child is over 18 and, perhaps, on his or her own. Other typical periods you might choose term insurance to cover include the time:
- remaining on your mortgage.
- you plan to work and have others relying on your income.
- remaining on an outstanding business or other loan.
Term insurance is typically about 1/3 of the cost of a permanent life insurance policy. However, it only lasts for the select term period that you buy.
Typically, term life is available in 10, 15, 20, 25 and 30 year term lengths. At the end of the specified term length, the coverage either ends or the premium significantly increases.
Types of term life insurance:
Why should I Buy A Term Life Policy ?
To put it simply, term life insurance is needed if anyone in your life would be negatively impacted financially should you pass away prematurely. Term life insurance is the most affordable type of life insurance policy, which makes it the easiest to fit into any budget. While this is most common with family members and significant others, many business owners need term life insurance to make sure that they are protected as well.
With families, it’s important to buy term life insurance if you’re approaching a major milestone in life such as marriage, having a child or purchasing a new home. Having a large increase in income can also be a common trigger for needing a new or additional term life insurance policy. As you get older and have fewer dependents and debts, you may need less insurance — or you might find that your needs shift and a permanent or final expense life insurance policy becomes a better fit at that time.
How much does term life insurance cost ?
Term life insurance policies are very affordable given that they only cover you for the set time frame you choose. The longer the term, the more expensive the premium.
| Age | Sex | $250,000 | $500,000 | $750,000 | $1,000,000 | $2,000,000 |
|---|---|---|---|---|---|---|
| 25 | Male | $16.68 | $26.74 | $36.98 | $44.69 | $83.67 |
| Female | $13.83 | $20.86 | $28.22 | $34.06 | $62.40 | |
| 35 | Male | $17.82 | $29.09 | $40.42 | $50.13 | $94.56 |
| Female | $15.56 | $24.48 | $33.58 | $41.27 | $76.83 | |
| 45 | Male | $33.41 | $59.37 | $85.84 | $110.11 | $214.52 |
| Female | $26.92 | $46.37 | $66.35 | $83.40 | $161.10 | |
| 55 | Male | $80.87 | $151.19 | $222.06 | $281.12 | $556.73 |
| Female | $57.40 | $105.77 | $154.80 | $199.74 | $393.98 |
Term Life FAQ:
Do I Need to Complete A Medical Exam?
While the majority of life insurance companies still require a blood test and urinalysis for the vast majority of life insurance sold, there is a growing number of products and companies available that do not require a paramedical exam. Most of these companies limit the maximum age to 60-65 for “non fluid” underwriting and only allow for smaller amounts of coverage. However, the industry is definitely moving in the direction of trying to abbreviate the underwriting process.
Does Term Life Build Cash Value?
Term life insurance does not typically build cash value. There are policies that include a “return of premium” rider, which allows the policyholder to get a refund of all premium at the end of the level term period. However, if you’re looking to build cash value within your policy, you’ll want to look at a permanent life insurance plan.
Is My Premium Guaranteed?
The premium is guaranteed for the duration of the level term period. For instance, if you purchase a 20 year level term policy, your premium will be guaranteed for 20 years. At the end of the level term period the premium will likely significantly increase. Group life insurance policies typically work different than this by increasing your premium at certain ages or every 5 years. It’s important to choose a term policy that maximizes the length of time that the premium and benefit are guaranteed.
Am I Too Unhealthy To Buy Term Life?
There truly isn’t a “one size fits all” carrier when it comes to life insurance. Every company has different underwriting niches that they’ve developed to corner a certain part of the market. It’s important to work with a broker who has access to every company available and has the resources and knowledge to make sure that the optimal carrier is chosen for you, specifically. Our clients are often amazed at what conditions are considered insurable by an insurance company. Feel free to ask if you have any specific concerns!
Can I Stop My Policy At Any Time?
Yes, you are not locked in for the full duration of the term policy that you choose. Life often changes quickly, which can increase or decrease the need for life insurance. If you ever need to stop the policy for any reason, you can do so.
Which Term Length Should I Buy?
The old adage with term life insurance is to buy the longest term policy available while you’re as young and healthy as you’ll ever be. Premiums exponentially increase with age, so it’s nice to lock in your rates for the maximum amount of time. If a health concern surfaces during your term policy you’ll be very happy that you maximized your coverage for as long as possible if underwriting becomes an issue.
What Is A Term Life Conversion?
A term life conversion is a provision within a term life contract that allows you to effectively trade in your term life insurance policy for a universal life plan without any evidence of insurability. This becomes a pivotal option if you know that your health makes a new life insurance policy unattainable.
If you purchased a 10 year term life insurance policy and 8 years into the contract are diagnosed with a critical health issue, you would be uninsurable and unable to buy a replacement policy moving forward. However, with only 2 years remaining on your current plan, you would frantically be looking for any option to protect your family. A conversion would allow you to trade in the remainder of the term policy for a universal life insurance policy that could be guaranteed for the rest of your life. The insurance company wouldn’t even require any new underwriting, but would accept the original health class that you obtained on the policy. Not all companies allow for conversions on their policies, so it is a nice feature to make sure is available.
How Much Term Life Insurance Do I Need?
There is no single right answer when trying to determine the proper amount of life insurance for you and your family. A method that many people use is to simply take your annual income and multiply that number by 10. However, if you’re looking for a more specific calculation, head on over to our “Needs Calculator” to find a more exact number.
Read More About Term Life:
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John Rotola2019-11-29 09:00:092020-04-24 05:23:50Is My Life Insurance Through Work Enough Coverage?
