Term Life Insurance

Features of Term Life Insurance

• Less expensive than all other types of insurance, so good for families on a limited budget.
• Coverage is for a limited time period, which is perfect for temporary insurance needs.
• The limited-time nature of term life insurance is also what makes it less expensive: since the odds are that the insured will outlive the term of the policy, the risk to the insurance company is minimal, translating into lower premiums for you.
• Can be renewed at the end of the term, but the premiums will typically be higher.
• You could qualify for lower premiums if you are in good health and live a healthy lifestyle.

Options

• Available in 5, 10, 15, and 20 year terms, or to age 65, age 75 or age 100 ("to age 100" represents permanent insurance).
• Can choose to have yearly increasing rates, or flat ("guaranteed") rates for the length of the policy. If you need to have low rates now, then selecting yearly increasing rates means lower immediate premiums.
• Premiums can be paid monthly, quarterly, semiannually, or annually.
• Can insure more than one person (eg. husband and wife) under the same policy. Insuring several people under the same policy is typically less expensive than insuring everybody with separate policies.
• Convertible vs. non-convertible: Convertible means that your term insurance can be exchanged (converted) for a form of permanent insurance sometime in the future, without having to prove your health.
• Renewable vs. Non-renewable: Renewable policies allow you to renew your policy when the selected term expires without proving your health, whereas non-renewable policies require you to re-apply and re-qualify.
• Waiver of premium: a safeguard against losing your policy. If you have an accident and become disabled, you may no longer earn a high enough income to pay your insurance premiums. With the Waiver of Premium option selected, after 6 months of disability, the insurance company will waive all of your premiums so you do not lose your policy. They also refund the premiums you paid over the last 6 months.

Uses of Term Life Insurance

• Provide money for family to continue living a similar lifestyle after your death.
• Pay down the mortgage or other loans when one's spouse dies.
• Leave an inheritance to the family.
• Applications in business: buy-sell agreements and business continuation.