You certainly aren’t alone if you find shopping for life insurance a perplexing and frustrating process. Even for those with a basic understanding, the intricate details of many life insurance products can be overwhelming for consumers.Term life insurance is one of the simpler policies, and it also happens to be a product that meets the insurance needs of a variety of family types. It offers you protection for a term amount of time or a specific time.
Years ago, you could only buy a one year, five years or 10-year policy. Then along came a more affordable 20-year policy. Years after that, a 30- year policy then became available among some insurance carriers. Now, they incremental term from 5 years to 30 years in 1-year increments. Now there are companies that you can custom design your term life insurance or the time in which you want coverage.
Remember, with the basic policy; your named beneficiary will receive the death benefit or face amount of your policy while your policy is in force during the specified time or term period of the policy. Since term life insurance is purely designed for protection purposes, it’s usually less expensive than permanent life insurance. A large percentage of term life consumers are opting for it because they feel their need for life insurance will shrink as they age. For example, a person may feel the need to protect their children by having a term life insurance policy, but feel that this need will decrease or end once their children reach a certain age.
While term life insurance sounds simple and straightforward enough, there are still a few additional points that you should be mindful of as you begin shopping:
Determine Your Objective
How long will I live? Did my parents have a long life span? What is my ultimate objective here? Do you want protection now or are you less concerned about having coverage as you get older? Do I only want to cover my mortgage balance but then leave my spouse or kids with nothing else? Do I have other debt that will be a burden for my spouse if I pass away unexpectedly? A decision on how much coverage I will need should be on the top of your list before shopping.
Did you know just recently the new wave for the insurance industry is to offer you living benefits on your term life insurance policy? This has now become one of the most exciting changes in the life insurance industry for the past few years. What happens if you can’t dress, feed yourself, or take a shower? Does this sound like Long Term care? This new critical illness or chronic illness riders are very exciting additions now to any life insurance policy. This new option (riders) that some companies now offer on your policy are similar but not exactly like Long Term Care or LTC as the industry calls it. Contact your agent for a further explanation of these rider options for your life insurance policy.
Terminal Illness Riders.
This allows a policyholder to use some of their Death Benefit before they pass away. This rider is now available with most life insurers. This benefit option would kick in only if a qualified licensed physician states in writing you are terminally ill and have a certain time to only live based on the policy provisions. A good agent will explain these options to you during the first visit.
The Ratings of the Insurance Company
How strong is the company you are going to enter into a promise to write your beneficiary a large check in the future in case you pass away during the time you are covered? Sounds strange to say it this way but this is a bilateral contract. You promise to pay your premiums, and they promise to pay you or your beneficiary the death benefit or other rider options. Will the company be there? Will they come through when your family needs them most with no delays during their emotional time of need?
What Happens after the Term Insurance Expires?
Can you afford the new rates in 5, 10, 15, or 20 years? Will you even need full coverage at that time? What happens if you don’t qualify for insurance when the current Term Insurance plan runs out after its term? What are your options? Will you have to lower your coverage amount just to be able to afford anything? These sorts of questions can easily be answered by a licensed and qualified agent who will listen to your needs, understand your concerns and put in your estate not only the proper amount you need but also the right type of coverage as well.
Group Term insurance.
What happens after you quit your job and had this wonderful term insurance all those years? What if you retire from work? What if you develop a medical issue while working only to find out the group insurance you had all these years is not portable, and you can’t take it with you? Group insurance always serves it purpose well but long before you leave your job it is always wise to make provisions for your own personal life insurance policy that your employer can’t control, but you control.
A group term life insurance policy is usually an employee benefit through an employer. In most cases, a short health history questionnaire is all that’s involved in the application process. Those that qualify will have the monthly premiums automatically deducted from their paychecks. On the other hand, an individual term life insurance policy involves you applying for the coverage on your own. Unlike group life insurance, you will need to have a physical exam and provide the insurer with your medical history during the application process.
It may seem like the group life insurance policy process is easier and less invasive, but the individual policy can offer you some advantages that the group policy doesn’t. First, you’ll own the individual policy and be able to retain it should you leave or be fired from your current employment. Second, rates on group policies typically increase every five years, but individual policies typically offer level premiums that don’t increase over the duration of the policy. Third, group policies are typically less flexible than individual ones.
Understand Your Provision of how to Convert your Term Insurance.
Upgrading is one of many valuable options consumers often overlook when buying term insurance. Are there any conversion credits during the term period that will reduce the cost to convert to a permanent plan? Does the plan allow you to convert with completely no medical underwriting? Thus, if you are no longer insurable, they must take you regardless of your current health conditions. You might ask the agent to give you an estimate of what the cost would be for a few years down the road if you would like to convert. This way you have a rough idea of what might be the case?
Read the fine print that may place limitations on the conversion option. For example, a policy might not allow you to convert to a permanent policy after you reach 70-years-old, or will only allow you to convert to a specific type of policy that the company offers. A qualified agent is there to help you for years to come, and you need to ask a lot of questions as mentioned above to be better informed when planning what is best for you and your family over a lifetime.