TERM LIFE INSURANCE ADVICE & STRATEGIES

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Advantages and Uses of Term Life Insurance

1. Term Life Insurance doesn’t have to be confusing.  Term Life Insurance is designed to protect for specific lengths of time and are commonly written for short term needs for either personal or business insurance situations.  We offer Term Life Insurance for five, ten, 15, 20, 25, and 30 year periods.  The 20 year term is the most common.
2. Along with coverage for a definite period of time, Term Life Insurance is also inexpensive when compared with permanent life insurance policies.  That is why we often say that Term Life Insurance is coverage you rent.  After your term of coverage is over you will have no further benefit from your period of coverage.
3. Term Life Insurance provides a death benefit only.  There are no surrender or ending values and the coverage you purchase is the cost of providing the death benefit only.  This tends to make it the most affordable form of insurance although Term Life Insurance costs more as you get older.  Term Life Insurance is known for its lower initial cost than almost all other forms of life insurance.
4. Most Term Life Insurance policies provide the option of converting the term policy to a permanent form of life insurance during the term and at the currently attained age. Along with this, many Term Life Insurance policies provide the ability to renew the policy for an additional term under certain conditions. The cost of the new coverage will be determined by your new (attained) age so the new term coverage will cost more than you paid for prior terms if you can qualify.
5. Term Life Insurance only pays a benefit if a death occurs during a period of coverage. This is why some agents explain that term insurance pays contingent on death.
6. Term Life Insurance is good for situations where the coverage needs decline over time. Covering a mortgage or debt might be a way to use Term Life Insurance.
7. Term Life Insurance is a good choice for young families that need lots of coverage while raising their children and less after they have grown up and moved on to school or jobs of their own.
8. Term Life Insurance is fairly easy to understand, has only a few variables, and when you need the most coverage for the least cost, or when a death benefit is needed for a temporary need like a debt or business arrangement.
9. Term Life Insurance is often used to protect a financial goal in savings, retirement, or business situations and is used to help assure that the accumulation or savings plan is accomplished regardless of life or untimely death.

Disadvantages of Term Life Insurance

1. The initially lower cost of Term Life Insurance literally changes every year as you age since life insurance rates are largely based upon your attained age. If you get to the end of a 20 year term your life insurance will cost more if you can qualify to buy coverage to extend the term or replace the prior policy.
2. It has been my experience that most people need Term Life Insurance for longer than they believe or expect. If the current term expires or matures and you need the coverage to continue, that means that you must be able to qualify medically for new insurance to have the protection continue.
3. There is no equity or value in term insurance when you quit or the policy term ends. It is like renting coverage and it only pays a death benefit while the term is active.
4. As many as 90% of Term Life Insurance policies never mature and reach the end of their term. This is because they are converted to permanent coverage or because people stop paying for their policy or abandon them for to buy longer terms of coverage.
5. At some point during your life Term Life Insurance will cost more than you can afford to pay for it. When that happens, for all intents and purposes, term insurance is priced beyond your financial reach. That means you won’t be able to get enough coverage for your needs or you will have to pay much more than you can afford to buy the amount of coverage you need.
6. Term Life Insurance is not designed for a lifetime or protection but many people try to make term do just that. Some companies will write special “universal life” policies that are often known as “permanent term” where you cannot outlive the policy or can keep coverage by paying the premium up to the end of life in the policy mortality table.

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