Term life insurance is a great way to get coverage for a specified period of time. Buying life insurance is for the protection of loved ones (or even business partners), to eliminate the risks associated with the loss of an income earner or key person. The use of “term” insurance is often recommended because the risks may eventually become manageable without insurance, or may simply cease to remain a risk at all. For example, you might need insurance that would help your dependents pay the mortgage if you died unexpectedly. However, if you had paid off the mortgage early, then there’s no longer a need for the insurance.
When considering applying for a life insurance policy, it is important to remember a few things…
1.) Will your policy provide adequate coverage? – It’s recommended to use a licensed advisor who can complete an “insurance needs analysis” for you. This will help in finding out what the right amount of coverage is.
2.) When will the policy expire or renew? – When a term life insurance policy renews your policy can become significantly more expensive (5-10 times more expensive).
Most term insurance policies carry a “renewal” and “conversion” privilege. This allows that policy holder to renew the policy for another term (up to age 85) without medical evidence or covert it to a permanent insurance policy. As was already mentioned, the renewal premiums can be quite high. This is because the insurance company is assuming that you are not healthy enough to qualify for a new policy…Basically they’re assuming that you have one foot in the grave. Converting is an excellent option if you need the coverage indefinitely. The insurance company won’t assume that you’re a high risk but will offer you competitive rates based on your original policy rate class – but for your current age. For example, if I was a standard rate class 20 years ago at age 30, and now I want to convert to a permanent plan at age 50, they will give me a standard rate for a 50-year-old now and average my costs to age 100 for my new permanent policy.
Want to Know More?
Life insurance is an important decision for anyone, and understanding the details of any policy is critical. We specialize in providing the information and guidance that you need to make an informed decision. Our experienced advisors are will to spend the time necessary to ensure that you are served properly and get what you need.
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