Understanding the Policy

Term Life Insurance is an insurance policy for a specified term i.e. fixed number of years. The term period may vary and allows for a death benefit in case you die before the term ends. The beneficiary then receives a tax-free sum of money.

Unlike the permanent or whole life insurance, the term life insurance is more affordable and is called a ‘pure’ insurance policy where the price you pay is for the insurance premium alone. The main difference is that it does not build an investment component known as the cash value. It is a simple and basic life insurance policy and is very popular among individuals in their younger or middle ages i.e. 30s or above to build a safety net for their dependents.

 

Policy Highlights

Pros

  • Greater coverage than a regular policy
  • Convertible to permanent plan later
  • Most recommended plan
  • Death benefit
  • Highly affordable

Cons

  • Does not have the savings component called the cash value
  • Might not be suitable for those having life-long dependents or high net worth

 

It is advised to talk to our life insurance experts to learn more about term life insurance and make a wise decision today!

Term Period

  • Varies from 5 to 40 years depending upon the age group and other factors.
  • Maximum term period allowed depends upon the age of the applicant

Maximum Age Limit

  • 90 years of age

How it Works

Term Life Insurance is an affordable purchase to provide a financial safety net to your loved ones even when you are no longer around to provide for them.

Nobody wants their dependents to be burdened by financial liabilities in unforeseen circumstances like the death of the income-earner in the family. Therefore buying a term life insurance is a prude decision to cover your family for the time till your mortgages, debts, and other financial liabilities like your children’s tuition/college fee and other expenses are to continue. If you have life-long dependents like a special needs child or an elderly at home, you probably need to think about the whole life or permanent life insurance.

  • Term period: Term life insurance can be purchased for a term of 10 to30 or 40 years in lieu of a premium or price that is paid every month or annually.
  • Premium: The premiums may increase, remain fixed or decrease (in some cases) over the years. This depends upon the type of insurance policy you buy.
  • Term-end: At the end of the term, the premium increases ten folds and it is usually expensive to continue the insurance policy beyond the term period. This is called ‘guaranteed renewability.’

Expiry of Policy

The fact that the insurance policy expires may sound a negative aspect however, it is a better option since in the later years of your life, there are very few or no obligations on your shoulders therefore paying for life insurance does not make sense. Instead, that is the time to enjoy the end of term benefits. If you feel that you need insurance coverage even after your insurance policy has ended, you can buy a new term life insurance policy or think about converting your present term life insurance policy into a whole life insurance policy.

Good news, there are no associated costs with the expiry of the term life insurance which makes this policy a very affordable option.

What to do?

After your policy expires you may:

  • Buy a new policy
  • Convert your policy to whole life
  • If you had a return-of-premium policy, the premiums will be refunded to you

Converting the Policy

A good thing about the term life insurance is that many companies offer a conversion policy. If you change your decision later, you may convert your term life insurance policy to a whole life insurance policy. Please discuss with our agent about the time limit for the policy conversion.

Cost of Term Life Insurance

The average cost of term life insurance is around $25 to $35 however, the actual cost increases depending upon how higher the following factors are:

  • Health risks
  • Age
  • Coverage Amount
  • Term Length

Types of Term Life Insurance

  • Level term life insurance: Costs fixed premiums over the life of the policy.
  • Annual renewable term life insurance Renews annually. Premiums increases over the year.
  • Decreasing term life insurance: Premiums remain fixed, but the death benefit amount decreases each year.
  • Return-of-premium term life insurance: The premiums you pay is refunded at the end of the term.
  • No-medical-exam term life insurance: Provides coverage without taking medical exams.
  • Group term life insurance: For official insurance provision.
  • Mortgage protection term life insurance: Where the mortgage provider is your beneficiary and the term is as long as your mortgage length. The benefit amount decreases each year.

Companies Recommended for Term Life Insurance

Companies that offer the best price are usually considered as a good provider for Term life insurance. However, it depends on your financial situation, current income, liabilities, and personal choice.

How to choose an insurance provider?

We recommend you to consider the following factors while choosing a company to buy any policy:

  • Price: premiums/coverage amount
  • Product: Benefits and convenience offered by the policy
  • Customer support: Customer reviews and experience shared by them
  • Ratings: look for the ratings by reliable sources like BBB, A.M. Best, and J.D. Power ratings.

Top 5 Recommendations

United Life recommends the top 5 companies for Term life insurance.

  1. Banner Life
  2. Lincoln Financial
  3. AIG
  4. Mutual of Omaha
  5. Prudential

Many other companies also offer a great price and suitable products. Please talk to us to learn more about the options available for Term life insurance so we may connect you with the best company that may furnish your needs adequately.