Life Insurance Policies

You’ll soon find that there are numerous possibilities if you’re in the market for life insurance.

Being able to choose is a good thing, but it does require that you weigh your alternatives and determine which kind of life insurance best suits your needs.

Different Types of Life Insurance

Term life and permanent life are the two primary categories of life insurance. There are then a number of permanent life insurance subtypes to take into account.

Here is a summary of the many kinds of life insurance and the key information for each to help you get started.

Insurance for term lives
entire life coverage
All-inclusive life insurance
Funeral and burial insurance
Life insurance for survivorship and joint Insurance for term lives
entire life coverage
All-inclusive life insurance
Funeral and burial insurance
Insurance for survivorship and joint life
Life insurance for mortgages
Life insurance on credit
Additional insurance coverage
Life insurance for mortgages
Life insurance on credit
Extra protection insurance

What Is Term Life Insurance?

If you want life insurance to cover transient financial demands, term life insurance is typically the most cost-effective choice.

Term life insurance might offer the temporary financial security you require if you have certain debts to pay off, such as a mortgage or a child’s college expenses.

A policyholder and an insurance company enter into a contract for term life insurance, which states that the insurer would pay a death benefit to the beneficiaries listed on the policy if the insured person passes away within the policy’s duration.

The term duration and the coverage amount are the two primary choices you must make when purchasing term life insurance.

Important Term Life Insurance Features

Term life insurance’s principal characteristics are:

It’s typically the most affordable method of purchasing life insurance.

There is a set period of time during which the rates on term life insurance policies are locked in.
A policy for term life insurance has no cash value.

How Term Life Insurance Policies Operate

For the duration of the level term, which is often 10 or 20 years, the yearly premiums for a term life insurance policy stay the same.

You can usually renew the policy after the level term period ends, but the premiums will increase each time you do so.

If you outlive the insurance’s duration without renewing it, the policy expires. Unless you purchased a return of premium term life insurance policy, you will not receive any of the premiums placed into the policy.

Many purchase term life insurance in order to replace their lost income. They are searching for life insurance that, in the event that the policyholder passes away, would cover a family’s needs for a predetermined period of years. Term life insurance benefits

paying out a mortgage’s remaining years in order to spare another borrower from having to sell their home.
Paying off other particular obligations that were slated to be assigned to another party.
ensuring there are enough money for living expenses and tuition for the years till youngsters graduate from college.

The policyholder chooses both the length of the term and the coverage amount, such as $500,000.

If the insured person dies while coverage is in force, the beneficiaries receive the policy’s death benefit.  If the insured person lives longer than the policy’s term and doesn’t renew it, the coverage ends.

You may be able to convert the term life policy to a permanent life policy, such as a whole life or universal life insurance.

This is a useful tactic if you realize you want longer life insurance coverage and don’t want to shop for a new policy, perhaps because your current health would make it difficult.

How Much Does Term Life Insurance Cost?

When purchasing a life insurance policy, age and health play a big role in the cost of the coverage. The average life insurance rates for healthy individuals are shown in the samples below.

Examples of Annual Term Life Insurance Costs for a 20-Year Policy at $1 Million

insurance cost table

Factors Affecting Potential Rates for Term Life Insurance

The duration and coverage quantity of your term life insurance policy influence your rates. Other elements influencing life insurance quotes consist of:

Years Gender
both height and mass
Past and present health
health history of the family (parents and siblings)
Use of marijuana and nicotine
Past substance abuse history
driving history, with a focus on moving infractions and DUIs
Some pastimes and pursuits (including scuba diving, flying, and other risky hobbies)
criminal past

Term Life Insurance Types

Level Term Life Benefits
Throughout the lifetime of the policy, the premiums and death benefit of a flat term life insurance policy remain constant.

Rates won’t go up as you become older, and whether you pass away in the first or last year of the policy, the death benefit won’t change.

For someone who want stability over a long period of time, a level term life policy can be appropriate.

Renewable Annual Term Life Insurance
Every year you renew an annual renewable term policy, the premiums go up. You don’t have to reapply if you select this policy; coverage is guaranteed to remain in effect.

It might be beneficial for those looking to cover a brief gap in their life insurance. But perhaps a short-term level term life policy would be a wiser option.

Term Life Insurance Decrease

Over the course of the policy, the premiums for a decreasing term life insurance policy remain constant, but the death benefit gradually drops.

One type of decreasing term life insurance is mortgage life insurance. In this case, the beneficiary is the mortgage lender rather than your family, and the payout is based on the amount of your mortgage that is decreasing.

It is wiser to go with regular term life insurance as your family will get the payoff and can utilize it for whatever needs to be covered.

Return of Premium Term Life Insurance

If you live longer than the policy’s term, a return of premium life insurance policy will reimburse your premiums. It goes without saying that the return function raises the cost of the coverage.

Companies including State Farm, AAA Life Insurance, Pacific Life, Cincinnati Life, and Vantis Life offer return of premium term life insurance.

What Is Your Need for Term Life Insurance Amount?

Generally speaking, you should get term life insurance for a sum equal to the obligations or debts you wish to pay off. A common purpose of life insurance is to cover costs for a family that the policyholder’s earnings would have covered.

If replacing your income is your aim, you should determine about how much your family will require to sustain your standard of life for the duration of the goal.

Selecting Term Life Insurance Duration

Take into account the length of the obligation or circumstance you wish to cover when determining the ideal term life insurance policy duration.

If, for instance, you are purchasing term life insurance to last the nine years it will take your children to graduate from college, you may choose to purchase 10-year term life. 30-year term life insurance is probably in your cards if you recently purchased a home and signed a 30-year mortgage.

Term life insurance policies are generally offered for 10, 15, 20, 25, and 30 years. Longer durations of 35 and 40 years are provided by certain firms (such as Banner Life and Protective).

Steve Robinson, Vice President of Partnerships at Legal & General America, states that the most typical term life length acquired is 20 years.

If the term life insurance policies aren’t enough to meet your family’s financial demands, you might want to look into a permanent life insurance policy like universal life insurance.

Most Typical Term Life Insurance Durations

Length of policy
Percent of term life buyers
20 years41%
10 years21%
30 years16%
15 years11%
Annually renewable (year by year) 5

What Happens If a Term Life Insurance Policy Is Outlived?

You can renew the policy annually at an increased rate after your initial level term length (for example, after 10, 20, or 30 years). If you didn’t buy “return of premium” term life insurance, you won’t be reimbursed for your premium payments.

Obtaining quotations for a new insurance is a smart move before paying the increased renewal premium. You might still be able to get a better rate on a new insurance even though you’re older and possibly less healthy.

Before the term expires, some people decide they don’t need life insurance and stop paying payments. Make sure you really don’t need life insurance before taking this action.

Selecting an Insurance Company for Term Life

To begin your life insurance purchasing process, it’s a good idea to compare life insurance rates. While selecting an insurer, you can be tempted to ignore everything else but price.

The greatest term life insurance providers, however, will provide flexible benefits at a competitive cost.

Features of coverage to search for are:

  • Are there living benefits? These allow you to access your own death benefit in cases of severe illness. You can use the money to pay for medical expenses, or anything else.
  • Is the policy guaranteed to be renewable? This allows you to renew the policy (at a higher price) once the level term period runs out. It can be useful if you reach the end of the level term period and still need life insurance but have health problems.
  • Can you convert the term policy to a permanent policy? This allows you to switch to a permanent life insurance policy. But there’s usually a deadline for doing it, so make sure you know your time window for converting to a permanent policy.
  • Can you change the policy face amount? If your life insurance needs change in the future, can you adjust your coverage amount? Usually you can only adjust downward.
  • Additional Advice for Term Life Insurance Purchases
  • Laddering life insurance: You can save money by laddering life insurance policies if you need coverage for varying durations of time. For instance, you may get a 20-year policy (or add a rider to a 30-year policy) to cover the period until your children graduate from college and a 30-year policy to cover the term of a mortgage. This avoids combining all of your responsibilities into a single, lengthy policy.
  • Short-term insurance: In order to guarantee coverage starting on the date of your application, you frequently have the choice to enclose a check for the first premium payment with your application. Processing an application might often take up to one month. You are covered for the duration of the application process by this. Before you sign up, ask your agent about this “temporary coverage.”

What You Should Know Before Applying for Term Life Insurance

You will complete an application if you find a quote you like and decide to get an insurance. It’s likely that the life insurance agent will review your application responses. Releases, like the one for your medical records, can be required of you.

After submitting your application to the insurance provider, you might be required to undergo a life insurance medical examination.

This often entails inquiries about your health and prescriptions, as well as measurements of your height, weight, blood pressure, and urine and blood samples to confirm the information on the application.

An EKG or cognitive evaluation may also be asked by a life insurer, depending on your age and/or the amount of insurance you have requested.

The life insurance firm will be conducting its own background investigation on you in the background. As such,

  • seeing your past and present prescriptions by gaining access to a prescription drug database.
  • requesting your medical records—should you have given consent—if applicable.
  • obtaining your car’s report.
  • gaining access to data from previous MIB Group applications for individual health and life insurance.
  • For a large quantity of life insurance, such as $5 million and up, getting a third-party verified financial statement.

A Buyer’s Checklist for Term Life Insurance

Determine the Amount of Coverage You Need

To determine how much life insurance you’ll need, use our free life insurance calculator. Generally speaking, take the assets your family could use in your absence (like current life insurance) and deduct the expenses you wish to pay (such as college tuition, income replacement, etc.).

Never offer less than your coverage estimate. Always err on the side of greater coverage. You can also get assistance with calculating a coverage amount from a life insurance agent.

Select the Term Length

Purchase a length that extends for as many years as you wish to offer coverage. Your rates will remain locked in for the duration of this term, which may be 20 years.

For instance, you could want your coverage to continue until your children graduate from college or until you retire.

Ask your insurance agent about no-exam options if you would like to forego the life insurance medical examination.

There will be additional possibilities for no-exam life insurance available to younger, healthier consumers. But, you might not find any reasonably priced no-exam options if you’re 50 years of age or older or if your medical history isn’t the best.

Compare Prices
Collect a number of term life quotations. Examine the features of the policies, such as living benefits and the option to convert to permanent life, in addition to the price.

Options for Term Life Insurance

You might be asking, “Is term life insurance worth it?” since there are other types of life insurance besides term life. Permanent life insurance policies come in a variety of forms as well.

Permanent life insurance coverage last as long as you continue to make payments, unlike term life insurance. A perpetual life policy, thus, ensures beneficiaries of a death benefit.

These insurance also accrue cash value, which allows the policyholder to access the benefits at any point in their lifespan.

The following are some permanent life insurance plans:

As long as you make your premium payments, whole life insurance assures you of a death benefit. It also assures you of level premiums, a guaranteed death benefit that won’t go down, and a minimum rate of return on the cash value.

Life Insurance for All People
Policies for universal life insurance provide lifetime protection and frequently accrue tax-free cash value. Within specific bounds, you might be able to modify both the death benefit and your premium payments.

Universal life insurance policies come in several varieties:

The least expensive universal life insurance is guaranteed universal life. A guaranteed universal coverage usually provides a minimum amount of financial value. It does not, however, provide the death benefit and premium flexibility provided in certain other universal life policies.

Indexed universal life: An index, such the S&P 500, is linked to the cash value of an indexed universal life insurance policy.

Within specific bounds, you can adjust the death benefit and the premiums.
Variable universal life: The cash value of a variable universal life insurance policy is linked to sub-accounts, which may contain bonds and stocks.

The cash value of the policy is impacted by the choices made regarding investments. You are able to alter the death benefit and premiums as needed. When purchasing a variable universal policy, the policyholder must

How to Complain to Your Insurance Provider

You have the option to complain to your insurance company if you’re not happy with them.

According to the National Association of Insurance Commissioners (NAIC), delays, inadequate settlement offers, and denial of claims are some of the most frequent reasons consumers submit complaints against their insurance companies.

Furthermore, you should find solace in the fact that 29% of complaints against insurance firms ended in a compromised settlement or resolution if you’re concerned that your complaint will go unanswered. The NAIC reports that in one-fifth (20%) of the complaints, the company’s position was reversed.

Six Options for Complaining About Your Insurance Provider

The following are the most popular ways to file an insurance complaint:

  • Speak with your agent for insurance.
  • Write to an insurance company executive.
  • Ask for assistance with your disagreement from a third party, such as an ombudsman.
  • Lodge a grievance with the insurance department of your state, which oversees insurance operations and insurer adherence to state statutes and guidelines.
  • If arbitration is a possibility under your policy, take it up.
  • Make a formal court claim against the insurance provider.
  • Promotion
  • Purchasing Life Insurance

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