Types of Term
  When to Buy Term
  When Not to Buy
  Level Term Protection
  Term vs Universal
  Term vs Whole Life
  What is Universal Life
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Decreasing Term: Decreasing Term is another option available when a level term reaches expiration date, but is sometimes purchased as decreasing from the start. The premium usually remains constant—or level, but the face value drops a bit every year, with these decreases becoming more radical over time. When a level term reaches the end of the initial term, a policy owner can choose decreasing term rather than annually renewable, and thereby keep the premium payments the same.

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Mortgage companies often use decreasing term, with the face value of the insurance dropping yearly with the principle of the mortgage note. When the face value reaches 0, the insurance simply ends. Decreasing term may also be used by business partners who need to cover investment or startup costs which will be absorbed as the business grows, thereby reducing the need for the insurance.

Joint Term: Joint term is one policy used to cover two or more people. It is often used to protect the family against loss due to the death of a primary wage earner, or to create a means to pay off a mortgage or other debt in the even of the death of either of the insureds. Term is used because at the end of the term—be it 10 or 20 years—the insurance will no longer be needed. Furthermore, if one person dies, the proceeds are used to pay the debt, which also eliminates the need for the insurance. In using a joint policy, the owners pay a single premium based on the average age of the two. This premium is always less than having two separate policies.

Survivor Term: Survivor term is sometimes called "second to die" and could actually be purchased as whole life rather than term. It is used to cover business partners for a needed time period, to provide an income for a family member when the second insured person dies, or to establish a legacy or endowment gift for a favorite charity. It covers two or more people with one premium and pays when the last insured dies. It is also assumed that when either the term expires or the last insured dies, the insurance will no longer be needed.

When to buy term

  • When you have a young family with children and need to protect against loss of a wage earner.

  • When whole life is temporarily unaffordable and the term has a whole life conversion option.

  • When you have a mortgage or some other debt for which the bank will accept a life insurance policy in lieu of mortgage insurance.

  • When you have a temporary need as a business partner or owner with key employees.

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