Term Life Insurance

Term life insurance is a fundamental component of financial planning, providing essential protection for families and individuals against the uncertainties of life. Unlike permanent life insurance policies, term life insurance offers coverage for a specified period, making it a popular choice for those seeking affordable and straightforward insurance solutions. In this article, we will explore the nuances of term life insurance, including who it is suited for, considerations regarding health conditions, its benefits, and potential drawbacks.

The key features of term life insurance include:

• Set number of years: Term life insurance is generally 10-30 years long, at which point at the end, the coverage ends. Many plans offer the option to convert to an annually renewable term, but this means the prices will increase each and every year. If you choose to do this, at the end of your term, you will see a significant price increase, which will then increase annually

• Less Expensive Coverage: Because the term only lasts for a set period of time there is a chance you can outlive the term. In fact, most people do. Because of this, the term prices are significantly cheaper. For example, a healthy 30 year old female can get $100,000 whole life policy for about $92, whereas she can get $300,000 - $1,000,000 with a term for the same $92 depending on how long she wants it to last

• Premiums may change: Some Term policies may increase in price as the years go on, but the ones we recommend are what you would call level-premiums. This means that the premium stays the same for the duration of the term. Some term polices will increase every 5 years, every year, or every 5-year age band (often, seniors will get offers in the mail for inexpensive polices around age 54, but the age bands are set to 55-59, then 60-64, etc.). This is a 5-year annually renewable term. So individuals will get coverage at age 54, think they get a good deal, then less than a year later the rates increase on them at which point many people cancel and cannot get a refund. Those who do keep it will see another increase before they turn 60, and another right before they turn 65. This will continue until the client cancels, the death benefit is paid, or they reach age 80 or 85 or 90 and the term is no longer renewable (at which point the client is left without any coverage)

• Living Benefits: Many term polices have what is called living benefits, where should the insured be diagnosed with a chronic, critical, or terminal illness a portion of the death benefit can pay early. This is not designed to replace disability income, but it can be a major financial relief to the family.

Term vs Whole Life

Term life insurance provides coverage for a specific period (Usually between 10 to 30 years) and offers a death benefit if the insured passes away during that term. It is typically more affordable and straightforward, making it ideal for covering temporary needs like income replacement or mortgage protection. In contrast, whole life insurance offers lifelong coverage with a guaranteed death benefit and a cash value component that accumulates over time. Whole life insurance tends to have higher premiums but provides a combination of protection and savings, making it suitable for individuals seeking permanent coverage and wealth accumulation opportunities. Ultimately, the choice between term and whole life insurance depends on individual financial goals, budget considerations, and long-term planning objectives.

Who Should Get A Term Policy?

Term life insurance polices are recommended for those who do not want or need a permanent policy, often these clients are looking for high amounts of coverage for a short amount of time. We generally recommend them for healthy clients who are looking to cover loss of income or pay off their mortgage for their family should they pass away. Clients older than 60 may still be able to get a term, but certain medications that have been prescribed may make it difficult to get approved. Term polices are much more strict when it comes to health because the goal of the policy is to outlive it, whereas the goal of a whole life policy is for it to be 100% sure to pay to your family when you pass away