Policy Options With Term Life Insurance Coverage
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Term life insurance is an attractive policy option for those who want to get life insurance without being stuck to a plan permanently. Choosing the right type of term life insurance is essential to ensuring the stable financial future of loved ones, but there are so many policies, riders and insurance companies out there that making the right choice can sometimes be confusing. Fortunately, by doing a little research and following a few tips, it is easy to learn about coverage options and in which situation a specific policy can be most wisely applied.
Group Life Insurance
Among the many different options for term life insurance is group coverage. Group term life insurance is a type of protection that is purchased in bulk by corporations and subsidized for employees, who can all benefit from the coverage as long as they agree with the terms of the policy. A huge benefit of group term life insurance is that it does not require a physical or medical exam and premiums are reduced, if employees need to pay at all.
Renewable Term Life Insurance
Renewable term life insurance benefits those who might decide to renew their coverage after the term ends. Convenience is key with renewable coverage because it can be reinstated with easy renewal forms without having to submit proof of insurability again, which is usually determined through a physical or medical exam.
Convertible Term Life Insurance
Convertible term life insurance is a type of policy that can come in handy for those who might start off only wanting a term life policy, but eventually convert to permanent life insurance. This is different from renewable insurance as the process just takes a single switch to permanent. Details with these policies must be reviewed since each company has its own terms and conditions.
Increasing, Decreasing Term Life Insurance
Increasing and decreasing term life insurance are forms of coverage in which the premium payments remain fixed, but the death benefit (or face value) will increase and decrease throughout the duration of the term period. For instance, a decreasing term policy can be similar to mortgage life insurance when it is used to cover your home. Since your mortgage principle is consistently decreasing, your coverage needs can decrease. As time passes, the insurance company’s and your own liability decrease, which allows your carrier to charge lower premiums from the get-go.
Decreasing term life insurance can also track other major debts such as large personal loans, business loans, and other liabilities that may require your personal guarantee.
Second To Die Life Insurance
Second to die, or survivorship, life insurance is used to insure two individuals, usually married couples, with one policy. The policy only pays out when both couples eventually pass away. A second to die policy can help beneficiaries pay for estate taxes, allow for you to enjoy your wealth while still passing on an inheritance, or keep your estate intact. To understand survivorship coverage requires research and a consultation with a tax attorney.
Do Not Rush – Compare Life Insurance Rates and Policies
Life insurance is fundamental to your family’s financial security, and no one should go without, but it is important not to rush into any decisions.
First, evaluate your circumstances to determine whether term vs. whole life insurance is the way to go, and then take a look at all of the different term coverage options. There are several other different types of life insurance. A bit of research up front can save valuable time, money and stress, and can make or break the insurance experience for everyone involved.
Second, calculate how much life insurance you really need. Some experts tout a multiple of your annual income, but that simplistic approach does not take into consideration your existing and future debts and obligations, such as the size of your mortgage, business loans, outstanding credit card balances, education costs, medical bills, the number of dependents you have, etc.
After determining which type of term life insurance policy is best, shop around like you would any other product or service. Each life insurance company treats risk factors differently and specializes in certain types of coverage. Get free online quotes and then follow up with companies to ask questions about their policies and coverage options. If you have a financial planner or advisor, contact him/her to discuss your interest in life insurance.
No one likes to think about their own mortality, but how would your family survive in case of a tragedy?
Gary Dek writes at MyLifeInsuranceQuotes123.com,a website providing unbiased life insurance guides for consumers looking for the best coverage and lowest rates. He is also an active member of the personal finance community at Gajizmo.com.
Photo courtesy of: Loren Kerns
John is the founder of Frugal Rules, a dad, husband and veteran of the financial services industry whose writing has been featured in Forbes, CNBC, Yahoo Finance and more.
Passionate about helping people learn from his mistakes, John shares financial tools and tips to help you enjoy the freedom that comes from living frugally. One of his favorite tools is Personal Capital , which he used to plan for retirement and keep track of his finances in less than 15 minutes each month.
Another one of John's passions is helping people save $80 per month by axing their expensive cable subscriptions and replacing them with more affordable ones, like Hulu with Live TV.
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