For some reason, life insurance often gets overlooked. For whatever and some very personal reasons people just don’t feel as if they need it. Sure, it is a reminder of our mortality, but it also makes our loved ones are provided for once we check out. Moreover, at the very least, it is a way to make sure you receive dignified care after death.
In fact, only 3% of all Americans said final expenses was a top concern, and only 26% said it was very concerning to them. Even more surprising is that less than half of the American population carry any life insurance at all.
Don’t put added weight on someone else’s shoulder by forcing them to figure out how to provide the proper care; when there is a relatively inexpensive and easy option out there. And that is Term Life Insurance. Read on to find out you can ensure your loved ones do not have to turn to a fundraising campaign or you do not end up in a dumpster. Okay maybe that was a little harsh, but it super simple to get a little bit of coverage.
Term Life Insurance Facts
Term life is a type of life insurance policy with a pre-defined coverage period, for example, ten years, twenty years, etc. Once that period is up, you will need to renew that policy or purchase a new one.
Common traits of a term insurance policy are:
- Low cost
- Zero cash value
- May have the option to renew
- Maybe convertible to permanent life insurance
The Nitty Gritty of Term Life Insurance
Term life insurance premiums are determined by a person’s age, health, and life expectancy. The rating for each is predetermined by the insurer. If the policyholder dies within the set policy period, the insurer pays the face value or dollar amount listed on the policy. If the term is up before death, there is no payout.
Once a policy expires, the insured may choose to renew. However, the new rate will be based on their age at the time of renewal.
Factors that go into life insurance rates:
- Age of the insured at the time of application
- Sex- is the insured male or female
- Health history, physical condition, weight, any disease or illness
- Driving records
- Smoker or non-smoker
- Occupation, certain types of employment are considered high-risk and will have higher rates despite the health of the applicant
- Family history, they look for conditions that might run in the family such as heart disease
Life Insurance Classifications
The following is how life insurance companies break down their risks:
Preferred – You are considered low risk. You have no medical conditions; don’t have a high-risk job or hobby; excellent health. You will pay lower premiums.
Standard – Considered an average risk. Maybe a history of some health issues but don’t have a terminal illness or a high-risk job or hobby. You will pay average premiums for similarly situated insured parties.
Substandard -Considered having a high-risk job, like a pilot, scaffold worker or diver; or you have a chronic condition such as diabetes, heart disease or high blood pressure. You will pay higher premiums.
Uninsurable – Those with a terminal illness will not likely find an insurer that will sell you a policy. You are considered high risk.
Put simply; the younger and healthier you are the better your premium will be. However, that should not deter you from taking out a policy if you are no longer a spring chicken.
Types of Term Life Insurance Policies Available
Level term or level premium-Level term life insurance provides the insured with coverage for a specified period; the term may be one, five, 10, 20 years or longer. Premium payments are fixed and guaranteed for the policy period.
Yearly renewable term– An annual renewable term (YRT) policy has no specified term and is renewable every year without proof of insurability. Premiums start off low and increase with the insured’s age.
Decreasing term-A decreasing term policy features a death benefit that declines each year according to a predetermined schedule. Premiums are fixed, the level premium for the duration of the policy.
Most often decreasing term policies are often associated with mortgage protection or car notes.
Who Needs Term Insurance?
Everybody!! If you still aren’t convinced that you should take out a term life insurance policy, here are some life changes when it would be wise to take out a policy, maybe a twenty-year term.
- Getting Married, don’t leave your spouse scrambling to pay bills when you pass.
- Having Children, maybe leave a little something for them to pay for their education.
- Just bought a house, term life insurance can help cover the mortgage.
If you would like more information about term life insurance, please contact us today! We will be happy to help.
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