Most people are surprised to learn that their property & casualty (P & C) insurance agent can help with their term life insurance needs, but it’s true. And that brings up some important points to consider if you are interested in exploring term life insurance for yourself.
You have two options when it comes to the type of life insurance to consider: term and permanent.
Term is the simplest form and pays if death occurs during the coverage period, which typically is anywhere between 1 and 30 years. People like it because it usually offers the largest insurance protection for your premium dollar.
The two types of term life insurance are level term, which means that the death benefit stays the same throughout the duration of the policy, and decreasing term, which means that the death benefit drops, usually in one-year increments over the course of the policy’s term.
Most people purchase level term policies.
Typically, the premium for the policy is based on the person’s age and health at the policy’s start date, and the premium remains the same for the length of the term. It’s important to note that most insurance companies will not sell term insurance to an applicant for a term that ends past his or her 80th birthday.
Permanent life insurance, also known as whole life, universal life and variable universal life, provides long-term financial protection and does not expire. So, unlike term life insurance, you can be covered by a whole life insurance policy well into your 80s and beyond, and the policy will pay a death benefit regardless of the age at death.
There are several advantages to this type of life insurance, as well as a few different options. If you are interested in learning more, please contact me and I will connect you with a couple of excellent resources who can help you.
Term life insurance is a good choice if you need life insurance but have a limited budget. Because this type of insurance only pays a benefit if you die within the coverage period, the premiums are lower than whole life insurance. If you think your financial situation will change, you can consider a convertible term policy, which enables you to convert to a whole life policy without a medical examination in exchange for higher premiums.
It’s best to purchase term life insurance when you’re young – prior to turning 40 years old, the age at which the premiums increase. And, just because your employer offers life insurance, it’s best to supplement it with your own policy. You may change jobs, which means that employer-sponsored life insurance policy goes away, and you might not have as much coverage with your next employer.
If you have kids, most term life insurance policies offer the option to add a child rider. That means that should a child pass away, the policy will pay a death benefit, which can be used to cover funeral expenses and time away from work. Typically, a single child rider will cover all children in the household from 15 days old to 18 years old. Some policies differ, however, so be sure to check for specifics on a child rider you purchase.
The bottom line is it’s a good idea to protect your family with life insurance, and the younger you are, the better it is to get started. If you are thinking about term life insurance, or have specific questions about the best life insurance option for you and your family, please contact me. I’d love to provide any additional information and guidance for you.