Buying life insurance is one of the most important things you should have. It is very underestimated but day after day people lose their loved ones and not everyone has thousands of dollars to pay their last hospital bills and their funeral. If you are reading this then good for you, you are doing your good diligence and will be protecting your family’s financials so that when you pass away the last thing they have to worry about is the finances while they mourn your passing. Term life insurance is one of the two types of life insurance and that is exactly what we are going to be unraveling today. By the end of this article, you should know whether or not you want to purchase a term life insurance policy or a permanent life insurance policy as well as the tips for buying term life insurance. The following are some key points from this article;
- Term life insurance is designed to provide affordable protection during the most vital periods of your life so it is only for certain duration.
- Level term life insurance is a type of term life insurance and a lot of companies offer this type of term life insurance because many people love this product. “Level” refers to your premiums being on the same level from day one.
- Medical exams can be dreadful for those individuals who are constantly busy and don’t have the time in their day to schedule a medical exam and wait for this information to go through the underwriters to get coverage. That’s why our favorite type of term life insurance is one without a medical exam requirement product because it is so convenient and you can get coverage as quickly as 24-48 hours which beats having to wait between 6-8 weeks for coverage! Feel free to take a peek at our list of the best no medical exam life insurance companies and check out the sample quotes provided!
Term life insurance explained
Term life insurance is a form of temporary life insurance that provides you with coverage for a short and specified period of time. Term life is one of the two main types of life insurance as we mentioned earlier. “Term” refers to the period of time you would like to remain covered for. This type of policy is not for the rest of your life if you are looking for something more permanent you should take a look at the bottom of the article where we will be explaining permanent term life insurance and permanent life insurance policies. Term life insurance is the most affordable life insurance product in the entire market and is a quick go-to for many of our clients. This product is more appealing because of the fact that it is the easiest type of life insurance. Most life insurance companies offer terms of 10, 15, 20, or 30-years. Since you are only going to be covered for a number of years you will not be able to accumulate cash value from this kind of life insurance. Term life insurance is ideal for those who only need life insurance to fill a temporary gap in their life, need to get an SBA loan, or simply doesn’t have the available funds for a permanent life insurance policy.
Term Life Insurance Example
To break this down a little easier Let’s use John as an example.
John is married with 2 daughters, 8 and 10. He makes about $100,000 a year and has a mortgage worth about $200,000. If John passes away tomorrow he’d want to make sure that his wife and children can continue to live the lifestyle he was able to provide for them, including paying off the mortgage, paying for a future college education, taking care of his burial expenses and maintaining at least 10 years of income. In this scenario all but one of these needs is temporary, so a 20-year term life insurance policy ranging from 1 to 1.5 million dollars should be sufficient.
If John happens to outlive the term we can assume his daughters are out of college and on their feet, his mortgage is paid off and his life insurance needs have changed. At this point, he has the option to let the policy expire(not recommended) or convert the coverage to a permanent product. Most term life insurance products come with an option to convert which will allow him to do that. The strength of this add-on is that John will able to convert the policy to a permanent one without proof of insurability, meaning at the same health class he attained when he was twenty years younger (and healthier). Even if he happened to get cancer in the process, he will be guaranteed coverage. The rate/monthly premium would be adjusted to his current age. At this point, his premium will go up due to old age, but he can also adjust the coverage amount to fit his current needs, which require far less coverage, which equals a lower monthly premium.
Return of Premium Rider
Term life insurance policies are highly customizable and come with add on’s called riders. If you can’t deal with the fact that your money “disappears” at the end of your term, there is something called a return of premium rider. What this rider does is exactly what is sounds like, it returns to you all of the premiums that you have paid out. Of course, this is given the fortunate scenario that you outlive your term. What’s the catch? Well, policies with this rider added can be as much as twice the cost, but the good news is, you get every penny back. My professional recommendation is that you skip this rider altogether. You’re better off buying a permanent policy or investing the money you will be saving, it will be worth much more to you once the term is up.
Term life insurance also comes along with many other add on’s, some that come with the policy, and some that will cost you extra, you can learn more about those here.
What does Level Term life insurance mean?
If you didn’t already know, level term life insurance is a type of term life insurance and a lot of companies offer this type of term life insurance because many people love this product. “Level” refers to your premiums being on the same level from day one. This is definitely worth the buy because you shouldn’t have to think about your premiums raising throughout your term. This will alleviate your stress and you can budget your lifestyle better knowing that for the next 20 or 30-years you will be paying the same premium and it will not be raised at any time of the life of your policy!
What does No medical term life insurance mean?
Just like the name itself states, this type of term life insurance doesn’t require a medical examination. If you don’t pick this product then you will have to undergo a medical examination. A medical exam will consist of a nurse going to where you want them to go at the time of when you want to take your medical exam. The nurse will have to draw blood and take a urine sample as well as check your height/weight and blood pressure. The nurse will take all the information collected to the underwriter of the company. This process can be dreadful for those individuals who are constantly busy and don’t have the time in their day to schedule a medical exam and wait for this information to go through the underwriters to get coverage. That’s why our favorite type of term life insurance is a no medical exam product because it is so convenient and you can get coverage as quickly as 24-48 hours which beats having to wait between 6-8 weeks for coverage! Feel free to take a peek at our list of the best no medical exam life insurance companies and check out the sample quotes provided!
Tips for Buying Term Life Insurance
The simplicity of term life insurance allows it to be a product that you can shop for online. No drives to financial advisors to discuss tax shelters and cash value accumulation. Here are a few things to keep in mind when buying term life insurance online.
Always Compare
Work with an independent agency that will allow you to compare quotes with all of the life insurance companies on the market(preferably A rated). This will make sure you get the best value on the market. Why pay more for the exact same protection? This means don’t go to the company directly because it may not be the best rate for you.
Work With an Experienced Agent
If you are anything other than healthy, then simply running your quotes online won’t do you much justice. Life insurance companies all specialize in different risks and have slight differences in their underwriting criteria. If you have serious health issues or partake in dangerous activities, then you want to make sure you work with an independent agent that knows which company would be best for you. If you read this far don’t waste your time looking for one, we’ve got you covered. We have years of experience dealing with “high risk” clients and know exactly which company will approve you for coverage at the best possible rate.
Term Life or Permanent Term Life?
Term life, it’s affordable, it’s convertible, it’s the best dollar for dollar protection and most importantly it’s simple. Simple to understand, and simple to acquire. You pay the life insurance company every month, and if you die, they pay your family what was promised, it’s that simple. Don’t forget you can always convert your policy to a permanent coverage and lower the coverage to adjust to your new responsibilities. If you can afford it you can opt for Guaranteed Universal Life Insurance policy. This type of life insurance is also known as “permanent term” or “lifetime term” because of its simple nature. The major difference is this coverage lasts anywhere from up to age 90 or age 121. It is the most affordable permanent life insurance on the market because also falls into the “pure protection” category of life insurance.
What about Permanent Life Insurance?
Permanent life insurance is different from permanent term life insurance so don’t get it confused because I did when I didn’t know much about life insurance! Permanent life insurance consists of different types of policies such as Whole Life, Universal Life, Index Universal Life, and Variable Universal Life. Whole life is a product that keeps allows you to have coverage for you guessed it, your WHOLE life! Whole life insurance is the simplest form of permanent life insurance because it doesn’t bother making investments but don’t worry you will be able to grow and accumulate your cash value with time. The Universal life policies are different from whole life insurance because these policies offer both flexibilities when it comes to your premiums and death benefit as well as investment options. If you are looking to make an investment but don’t want to be the one monitoring it you should go for an index universal life insurance policy plus they have a cap and floor so there isn’t much of a risk associated with this policy. If you are looking for a challenge feel free to buy a variable universal life insurance policy because you will have to monitor your investments on the daily and there is no cap or floor so you are vulnerable to market inclinations. These two policies use a part of your earned cash value to make these investments and for all permanent life insurance policies, you will be able to access this cash value at any time by borrowing from your policy.
Work with us!
InsureChance in an online life insurance marketplace. You can compare term life insurance quotes on this very site or call us today to ask us anything! If it’s not too late feel free to use the chat feature below. If you still are unsure about which policy type to buy don’t hesitate and give us a call or chat with us so that we can walk you through the whole process! Did we forget to mention that our services are 100% FREE? Quotes provided are also FREE OF OBLIGATION! Click on any of the boxes on the right-hand side to compare quotes for term life, no exam and permanent products. If you have any questions or feel like we missed something, please drop us a comment below.
