Including life insurance is essential in nearly any good overall financial plan. This is because this type of coverage can help policy holders to protect their loved ones from the high cost of final expenses and other debts, as well as from the loss of income should a family’s bread winner pass away unexpectedly.
In today’s life insurance marketplace, there are two key types of coverage. These are term and permanent. Within each of these categories are many different versions of coverage, each with its own features and benefits that may work in various financial planning situations.
How Term Life Insurance Works
Term life insurance is considered to be the most “plain vanilla” type of coverage. These policies provide a set amount of death benefit in return for a regular premium payment. Term policies also have a specific duration, such as 5 years, 10 years, or 20 years – after which, the policy will expire.
At that time, the policy holder will either need to renew his or her term life insurance coverage, or simply let the policy end. Due to the set time frame of term life insurance, the policy will only pay a death benefit to the beneficiary if the insured’s death occurs while the policy is in-force.
Unlike permanent life insurance coverage such as whole life, term insurance does not provide any type of cash value build-up or investment feature within the policy. It is for this reason that the premium for term coverage is typically less than that of permanent life insurance plans with a comparable amount of death benefit coverage – at least initially.
When the initial “term” of a term life insurance plan ends and the policy holder opts to renew his or her coverage, the new policy will be underwritten at the then-current age and health condition of the insured. Because of the insured’s older age – and any potential adverse health conditions that the insured may have developed – the premium on the renewed policy may be quite a bit more than that of the policy’s previous cost. And, in some instances, the policy holder may even be deemed as uninsurable.
Types Of Term Life Insurance Coverage
There are several different types of term life insurance coverage. One type – level term – will keep the face amount (death benefit) of the policy the same throughout the entire duration of the policy.
This is different from a decreasing term policy where the amount of the death benefit proceeds will become less over time. Conversely, an increasing term life insurance plan will have a death benefit that increases over time. This will typically also require an increase in premium as well.
There is also fully underwritten life insurance which requires a medical exam and no exam life insurance which doesn’t require any exams. The insurance company will still ask you all of the health questions and look at your medical records. These plans are much quicker than a traditional policy but they are going to be more expensive.
Another option is a guaranteed issue term life insurance policy. These policies are even more straightforward than a no exam policy. There is no exam and no health questions involved. This is the quickest way to get life insurance (you can get approved in less than an hour), but it’s also the most expensive and you can’t get a lot of protection. Most companies will only allow you to buy around $25,000 worth of coverage.
Why Buy Term Life Insurance
There are numerous reasons for purchasing term life insurance. First, this type of policy may allow an insured who is young and healthy to purchase quite a bit more coverage than a permanent life policy with the same premium amount.
Term life insurance policies are also good for covering debt obligations that are for a set amount of time. For example, if an individual wants to ensure that his loved ones can pay off a home mortgage should he pass away, he could purchase a 30-year term life insurance policy in the amount of the mortgage balance that is due. Should the policy holder live for at least 30 more years – and have his mortgage paid off – the need for that particular policy will no longer be present when the term life insurance policy expires.
One of the main reasons applicants buy a term insurance policy instead of the other options, like a standard whole life insurance plan is because of the price. Term plans are much more affordable than the other choices. If you want affordable insurance, term is the way to go.
Where To Get Term Life Insurance Quotes
Term life insurance quotes can be found in a variety of ways. These include online, via telephone, and through a personal meeting with a licensed life insurance agent. When obtaining a quote for a term life policy, certain information will be needed from a potential applicant, such as:
- Age or birth date
- Smoker or non-smoker (or user of tobacco in other forms)
- Amount of policy benefit
- Length of policy duration
In most cases, premiums on term life insurance will be higher for those who are smokers, as well as for those who may have certain types of health conditions. In addition, applicants who are older will also likely pay more in premium than their younger counterparts for the same amount of term life insurance coverage.
Getting Affordable Term Life Insurance
If you think that life insurance has to be expensive, you couldn’t be further from the truth. There are dozens of different ways that you can get affordable life insurance protection for you and your family. Making a few simple lifestyle changes can help you get the lowest possible premiums available.
The first thing that you should do is kick your bad habits like smoking. As we mentioned, smokers are going to pay much more for their life insurance. Smokers are going to be at a much higher risk for complications like cancer or heart problems. This means that you’re going to be a greater risk to the insurance company. They are going to offset that higher risk by charging you higher premiums for your insurance protection. In fact, a smoker is going to pay twice as much for life insurance versus an applicant that doesn’t smoke. If you want to get the most affordable life insurance plan, you’ll need to kick those cigarettes to the curb once and for all.
The next thing that you should do is improve your overall health. The insurance company is going to require that you take a medical exam, and the results are going to play an important part in how much you pay for your coverage. If you want to save money, then you’ll need to get better results from the exam. The two best ways to do that are by skipping the junk food and by going to the gym several times a week. Both of these are going to help you lose weight, lower your blood pressure, and reduce your chances of getting diagnosed with health complications. If you’re overweight, you’re going to pay around 50% more, which means that hitting the gym could save you hundreds of dollars every year.
The best way to ensure that you’re getting the lowest rates is to compare dozens of quotes before you decide which plan is going to work best for you. Every insurance company is going to give you different rates depending on their medical underwriting and rating system. You could get varying rates depending on which company that you get the quotes from.
Many websites and insurance agents will also provide a potential term insurance buyer with comparisons of different term life quotes from various insurance companies. This can help individuals in making a better and more informed choice.
We are a group of independent insurance brokers, which means that we work with dozens of highly rated companies across the nation. There are thousands of different companies on the market, which means that you could spend weeks calling different agents to get the best quote. Instead, let one of our experienced agents do all of the hard work for you. We can bring all of the best life insurance rates directly to you.
Our agents have years of experience working with all types of applicants. We know which companies are going to give you the best coverage to fit your needs. It’s our mission to ensure that you’re getting quality life insurance at an affordable price. Not only can we help you find the cheapest term life insurance, but we can also help you decide how much life insurance that you’ll need to buy.
Not having enough life insurance protection is one of the worst mistakes that you could make. If something were to happen to you, your family would have additional expenses that they didn’t have the pay to cover. We can help add up how much life insurance that you and your family need.
If you have any questions about term life insurance or want to get customized quotes, contact one of our agents today. We would be happy to answer those questions and connect you with the best policy for you.
You never know what’s going to happen tomorrow, which means that you shouldn’t wait any longer to get the life insurance protection that your family deserves. If something were to happen to you, and you didn’t have life insurance, then your family would be left with a mountain of debt. Losing a loved one is never easy, but being responsible for thousands of dollars of debt is going to make the situation much worse.