Making the choice
for Term Life
Life insurance is something nearly everyone needs because the one
sure thing in life is that we are all going to die; and when we
do, someone—a child, a spouse, or grieving relatives—will
have to pay the bill. In addition, you may want your loved ones
to have a temporary income, or you may want to leave a legacy for
an organization that has been important in your life. In any case,
the following information is intended to help you understand whether
or not TERM life is your best choice.
the right choice?
Do you want long term cash value, protection to age 100, a benefit
you cannot outlive so long as the premium is paid? If so, TERM life
is NOT the choice for you. But if those issues are not your reason
for purchasing life insurance, read on. Term coverage may be the
best for you.
What is Term
Just as it implies, Term life is a policy that protects you for
a period of time, called the "term." If you die during that period,
your beneficiary receives the full value of the policy, even if
you only made one payment before disaster struck.
How high can
my benefit (face value) be?
Your face value is nearly unlimited depending on the company and,
of course, on your health.
Will my premium
change as time goes by?
No. Your premium, as well as your face value, is called "level,"
meaning it does not change for the duration of the period.
can be included?
Like other types of life insurance, you can usually purchase a spouse
rider, children's riders, disability waivers, unemployment waivers,
and many others, depending on the company.
at the end of the Term?
All companies have renewal options for their term polices. You can
either renew the Term or convert the term to anything else the company
owns. You will pay the premium for your age at that time. If you
do nothing, the coverage will end. If you renew, you will pay an
increased premium every year, the amount controlled by the company.
What if I become
disabled, can't afford an increase, and can't purchase a new policy.
Will I just be without insurance?
So glad you asked. Any time you purchase a TERM insurance policy,
it is worth your while to pay two or three dollars extra to have
the "waiver of premium" rider. This rider obligates the company
to continue payment of your premium if you should become disabled
before the age of 60 (65 with some companies). That means that even
though your Term policy might expire under normal circumstances,
the company will have to pay the renewal premiums to keep it in
force. In effect, this rider turns a TERM policy into a whole life
policy minus the cash value side. Of course, you have to become
disabled to take advantage of the rider, and it drops off at age
60 or 65. However, since people under the age of 40 are 65% more
likely to become disabled than they are to die, this rider is well
worth the few dollars extra.
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