Term life is less expensive than it has been in the last 20 years. With increasing longevity and cut throat competition the carriers have been forced to keep premiums at all time lows.
But be CAREFUL, not all Term Coverage’s are created Equal.
Important Features that some carriers offer at little to NO COST.
This is probably one of the most important. This import feature allows the insured to switch to a permanent policy at a future date with NO NEW UNDERWRITING ( *1 ). The insured carries their original good health over to the permanent style life policy that can go to age 100 + with a level premium. This means (* For example a 67 year old male who took out a 20 year term when he was 48 at preferred health could switch to a permanent policy at age 67 after suffering a Severe Heart attack 3 months prior and maintain his preferred health status in the new permanent policy.) This is obviously a huge advantage over having to go re-qualify for coverage after a severe life event.
A less available feature with lots of great value is a “Living Benefits Rider” while there are many versions of this rider; usually it offers an acceleration of some or most of the death benefit when either Chronic Illness, Critical Illness or Terminal Illness triggers are met by the insured. Some examples might be, cancer, heart attack, stroke or organ transplants. Also in the event of the insured being unable to perform 2 of 6 named daily activities, like bathing, dressing or eating, a benefit might be payable under this rider.
This benefit allows access to the death benefit values prior to an actual death when the insured has a 12 month or less expectation to live. While it does vary by company, it is fairly common to advance up to 50%. May or may not be a taxable event.
(* 1) Time limitations usually apply to age 70 or 75. May not available with many carriers and is usually a “At no charge feature”.
Two other important things to consider:
- Term Layering – Many people have a need for coverage today with young children to protect and a large mortgage to be paid off. Later in life you are usually protecting less and most likely need less. To solve for today’s needs, you could buy a 15 year term targeted to get the kids covered till out of the home plus a 20 or 30 year plan for that mortgage. This type of layering may save you many hundreds of dollars per year, possibly MORE at older ages as a 15 year plan is usually near half the price of a 30 year plan and will normally be significantly less expensive than doing all as a 30 year program.
- Permanent Coverage – Coverage which can last your whole life with a level premium is generally considered “Permanent”. This coverage should not be overlooked before purchasing a Term Plan. There are unique benefits these plans offer that a term will not. Level Premium to age 100, cash accumulation, tax free loans, and income withdrawals for retirement. These also work well when layering coverage’s.
Additional riders that may be available are:
Waiver of Premium
- Can waive your insurance premium if disabled after a pre-determined time.
Waiver of Planned Premium
- Can waive your “planned” premium if disabled after a pre-determined time.
- Replaces lost income due to a covered injury or accident.
Return of Premium
- Returns your premium at end of a pre-determined period.
- Insure another person on same plan as a second insured.
- Cover children on your plan up to a certain age.
- The ability to purchase additional coverage in the future with original health.
You can not buy the same company program policy for a lower price anywhere.
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