everything you need to know about Term Life Insurance
Term Life Insurance is about providing temporary life insurance protection for your loved ones and providing you with the peace of mind you seek.
Temporary Life Insurance is available for terms of 1 to 30 years, though the most popular terms are the 20 and 30-year terms.
You pay a premium and if you were to pass away during the term you have chosen, the beneficiary of the person you chose to leave the money to, will be given a check by the Term Life Insurance company.
Term Life Insurance is the simplest form of life insurance to understand and purchase, however, there are different variations that you should be made aware of.
If you sign up for a low-cost term life insurance plan, make sure you understand if it’s renewable.
That means after your term ( 10/20/30 years) ends, are you able to renew the life insurance policy or convert it into a permanent life insurance policy?
This is certainly an important aspect of the decision-making process to take into consideration.
If you have a 30-year term life insurance policy, and after your 30 years are up, you still need coverage–you DO NOT want to have to go through underwriting again.
Term life insurance rates are based on your health and age at the time of application.
Unlike health insurance premiums that go up 15, 20, or even 30% every year, term life insurance rates for the most part stay level for the duration of your term.
It’s pretty nice actually you don’t have to worry about your rate getting jacked up every single year because your coworkers or your neighbors are not as healthy as you are.
Your family’s health history plays a part and how a term life insurance carrier will underwrite your application.
If your family has a history of cancer or heart issues, you can expect to pay more because there’s a good likelihood of course not guaranteed, but a good chance you will have issues.
Of course, an affordable term life insurance policy doesn’t pay for hospital bills but some plans come with the riders or additional benefits such as a critical illness rider that would basically payout if you had a heart attack, stroke, cancer, things of that nature. Even if you did NOT pass away.
Even if you’re not in the best of health there still is a likelihood that you can get a life insurance policy.
Granted, your rate will be higher than if you would qualify for in the prime of your life, but the main point to consider is that you have coverage and your family that you’re going to leave behind won’t be burdened by a mountain of bills.
One example of a life insurance policy that you could get if you are sick or going to seek treatments for a major condition is called a graded benefit life insurance plan.
A general example of how this kind of life insurance policy would work, let’s say you bought a graded benefit life insurance plan from Acme life insurance company.
They may say there is a one-year waiting period before any death benefits will be paid out.
So you would pay for 12 months of premium, and on the 13th month, if God forbid you passed away your beneficiaries would be cut a check.
Consult a local life insurance agent if you are considering a graded benefit life insurance program, because you may qualify for a full coverage underwritten life insurance policy which would be your be in your best interest to investigate before signing up for the graded benefit life insurance plan.
Types of Term Life Insurance
term life insurance has 3 major types
Level term life insurance provides a death benefit that stays the same over the period. For example, a 5-year level policy with $10,000 in coverage means the company will pay $10,000 if you die any time during the 5 years the policy is in effect. Premiums normally stay the same (“level”) during the term.
Decreasing term life insurance provides a death benefit that decreases over the life of the policy in a specified manner. For example, the benefit during the first year of a 5-year decreasing term policy may be $10,000, and decreases by $2,000 every year. by the end of the 5th year, the face value is zero and coverage expires. Premiums for decreasing terms usually remain level.
Increasing term life insurance provides a death benefit that increases over the term in a specified manner. For example, the benefit for a 5-year increasing term policy may have a face amount that starts at $10,000 and then increases 5% every policy anniversary date. Or the coverage may be tied to increases in the cost of living as measured by a standard index. Premiums usually increase with the coverage in this type of policy.
Affordable Term Life Insurance Quote
When shopping quotes for life insurance, it’s often very easy to find an affordable term life insurance quote because there are so many companies vying for business. That being said, you have to be careful that the company with the most affordable term life insurance quote is also the best value for the money.
Term life insurance is fairly generic, and because of that one might assume that price is the only differentiator between the companies. Sadly, this is not true.
For example, some hidden cost factors to consider are how your premiums will increase over time, if at all. Will your affordable term life insurance quote include locked-in rates for the duration of the policy? Also, what about renewal options? Does your quoted policy give you the option to renew once your term has expired? If so, at what rate will your renewal be quoted?
Next, what type of exclusions reside in the fine print? Are there any accidents or incidents that are not covered by your affordable term life insurance quote?
These are the things you need to look out for when buying term life insurance, as many low rate companies will try to sneak in higher costs down the road, knowing that their clients will be lured in by the initial estimate, which is lower than the competition.
Beyond that, even if the quote is legit and the coverage is good, it’s important to make sure that you are covered as long as you need to be. An affordable term life insurance quote does you nothing if it covers you until you are 80 and you die at 81.
When buying term life insurance, it’s important to really analyze your future, talk with your family, and take the time to really understand your needs. Also, even though many life insurance agents are very persistent and even high pressure, a good one is worth their weight in gold and can be one of your greatest assets.
A good life insurance agent will not only help you find an affordable term life insurance quote that meets your budget but can also help you custom build a policy that works for your situation. You might only want coverage for $10k to cover the cost of a funeral, but if you are the sole breadwinner then it might make more sense to get coverage for several hundred thousand dollars in order to help raise your children until they reach the age of 18 or make it through college.
You see, buying life insurance isn’t just about getting the most affordable term life insurance quote and then buying it. You must really take a good hard look at your life, your goals, your plans, and your family situation and then make a decision based on all of those factors. This is why I recommend that even if you are looking for an affordable term life insurance quote, that you speak with an agent before making a buying decision.
Term Life Insurance Prices
Buying life insurance is an important part of being a responsible adult, and because of that, many adults look into both whole and term life insurance prices. For the former, you will get more comprehensive coverage while also paying quite a bit more. The benefit to doing this is that you build equity, though the downside is that you will spend a lot of money to get there.
On the other side of the equation are term life insurance prices, which are much cheaper than whole life, and often offer the same death benefit. The downside to these prices is that while they are much cheaper, they also stop paying the minute you stop paying, so if you want lifetime coverage, you have to pay until you die. Sounds rough I know, but it’s the price you pay for inexpensive coverage.
Now, don’t get me wrong, term life insurance prices are great, especially for those on a budget, but that doesn’t make them perfect. Really, you just have to decide how much you can afford, and then compare options, as we will today, to see which route you should move towards.
If you are a family man that makes quite a bit more money than you can afford to save, then you will find that a whole life insurance policy makes an excellent investment vehicle for overage that cannot fit into your 401k or Roth IRA. The whole life is also great for those that can afford more now in the event that they might lose wages down the road.
On the other hand, term life insurance prices favor those that want to get a jump into life insurance coverage without having to worry about premiums. With term life insurance, you just pay and go – which is very nice. If you decide you want to convert your term life insurance prices to whole life prices, then you will be happy to know that several companies do offer this option.
If you have to choose between covering just yourself with a whole life policy, or being able to cover your entire family, kids, and all, with a term life policy, then you might be better off biting the bullet and covering the entire family. In almost every case, you can purchase the same death benefit, which is great for older folks or those that might be ill. It sounds morbid, but unfortunately, it’s something you have to consider at that stage.
Lastly, if you want to get the best insurance rates possible, then you should buy young before you are sick or injured. It also helps that you aren’t a tobacco user, as tobacco use is known to significantly increase the premiums on both whole and term life insurance prices.
The difference between buying whole life and term life insurance prices varies by state, company, and amount of coverage, but one thing is for certain: there is no right answer, and it is the type of decision that should be made on an individual basis, after a bit of research, and a lot of analysis.
Competitive term life insurance
Thanks to the current life insurance market, shopping for competitive term life insurance rates has never been easier. The Internet makes it extremely easy to get started, and even shop, buy, and compare policies, but it also makes researching easier than ever because you can learn just about everything you need to know about it without leaving your home.
I use the term competitive because it perfectly describes the state of the current life insurance market. There are a lot of buyers, and hundreds, if not thousands of companies trying to get their business, which means you can find competitive term life insurance rates without having to haggle or negotiate with a term life insurance agent.
So where do you get started? Do you just Google term life insurance, or are their sites to find the best rates in today’s market?
My answer is that you start by learning about term life insurance first, and really spend the time to ascertain how much coverage you need, and how much you can afford to buy. This way, you’ll enter the conversation with leverage and can avoid being convinced to buy more coverage than you really need.
From there, it’s simply a matter of creating a list of several companies that you trust and are comfortable doing business with. Start by asking your friends where they buy life insurance, and check sites like Twitter and Facebook to get referrals and recommendations. After that, you can visit each of their websites and see if they can offer you a competitive term life insurance rate that falls within your criteria. If not, you move on to the next until you’ve found the best deal.
Of course, when shopping for competitive term life you will probably have to get a medical exam as the final part of the purchase process, but as long as you are in reasonably good health, then you should not have anything to fear. They’ll want to see if you smoke or use tobacco (it’s much cheaper to buy insurance if you don’t), and they’ll want to make sure you aren’t pregnant or suffering from a chronic or terminal condition.
As long as you are healthy, they will approve your purchase and you can get started. It’s as easy as that!
As a former customer of New York Life, I have my own personal preferences in where I buy competitive term life insurance, but if you look around, I can guarantee you will find 100 people with 100 different preferences. The key really is finding a company that you trust, that won’t jerk you around when it comes to paying a death benefit, and that offers you a policy at a reasonable rate.
If you are struggling to find competitive term life insurance, then it’s possible that you are either looking too hard or are looking in the wrong place, at which point I always recommend that you call an agent and explain your predicament – they should be able to get you squared away ASAP.