Is Term Life the best choice for you?
Many of our online insurance shoppers have found that a quote comparison gave them an opportunity to save 35% to 65% in insurance premiums, resulting in cheap Term becoming even cheaper.
These tips for online shoppers should help you to better define Term Life insurance:
- Term Life provides your beneficiary with a cash payment if you die during a specified time period–usually 10 or 20 years.
- Term Life does not build a cash value; you pay only the cost of insurance plus annual fees. Thus, it is one of the least expensive types of life insurance.
- Term Life usually has a "level" premium and level benefit during the period of the term. Level means that it doesn't change. Make sure you have a "level" premium, not a modified or annually increasing premium.
- Term life is best for those who need temporary coverage; for example, you may need to protect a business, cover a mortgage, or provide for a growing family in the event of your death. You may also be building some retirement assets which could make life insurance unnecessary once your family is grown and your bills are paid. In this case, Term Life would be your best choice.
- Term life can be renewed or converted at the end of the initial time period. Make sure that one of your conversion options will be universal or whole life. Your premiums will go up, but you will be able to get a level premium and a policy that will not expire. Conversion to Annually Increasing Term will result in a policy that cannot be renewed after age 85 and that will become extremely expensive as time passes.
- In addition to avoiding annually renewable, you should also avoid a Decreasing Term. In Decreasing Term, you pay a level premium, but your benefit drops as you get older.
- Term Life is available with riders and as a joint policy. Riders are "add-ons" that cover your spouse, children, or provide for a premium waiver if you should become disabled. Riders increase your premium, but not as much as having two separate policies.
- A joint term will allow you to insure both yourself and your spouse on the same policy. The policy would be more expensive than just insuring one of you, but less than having two separate policies. Also, if one person is significantly older than the other, you will be paying a premium that is an average of the ages of the insured individuals.
- Find out if the company gives you any conversion credit if you convert to a different type of policy with the same company.
- All policies come with tables showing you what the premiums will be if you decide to renew or convert later in life. Ask the agent how to use the tables to calculate your premiums in the future.
- Ask if an Accelerated Death Benefit is included. This is a rider that gives you have a portion of the face value in cash if you should become terminally ill.
- Select an agent who will take the time to explain your options and who will help you complete an analysis of your financial and medical situation. It accomplishes nothing if you get declined for health reasons or if you take a policy that is more expensive than your budget will tolerate.
- Choose a company that has a good record for paying claims in a timely fashion. Rating services can sometimes help. However, talking to people to find out what companies they have worked with can be equally valuable.