Term Life Insurance
Term Life Insurance is a value life insurance tool that allows a person to maximize their death benefit for their beneficiaries and minimize their premium for a specific period of time.
Some examples when you would consider using Term Insurance:
- To cover a debt or mortgage that lasts a specific limited time.
- When income is limited but the need for more life insurance benefit is greater, such as a family with young children.
- Covering a business buy-sell.
- Protecting your insurability at a younger age.
Not all term insurance are the same.
- Most people look for the least expensive premiums but that may not always be the best value.
- Some Term policies are not renewable or convertible.
- Many Term plans have the ability to convert to a permanent plan:
- Look at the financial strength of the insurance company,
- Know during what period and to what age the conversion can be exercise,
- Understand what permanent plans the term policy can be converted to. Some companies limit the permanent plans available.
Waiver of premium is a value rider especially if there is any consideration or anticipation to convert the policy to a permanent policy in the future. Accidental Death Benefit is also available with most term plans.
Some companies have a return of premium rider. There I usually an additional premium for this benefit but may result in a lower net cost of the policy if the policy is not used as a death benefit.
Some companies have additional Living Benefits which are essentially an acceleration of the death benefit that is available while the client is still alive. A couple of examples are: Long Term Care riders, Chronic Illness riders or Critical Illness riders. Be careful to fully understand these benefits as there are major differences between them. The need of the life insurance benefits to the beneficiary should be considered as the death benefit may be significantly reduced if the Living Benefits are used.