Term Life Insurance
Maximum Death Benefit Protection For Your Dollar
What Is a Term Life Insurance Policy?
A Term life insurance policy is insurance protection and does not accumulate cash value like universal or whole life insurance. Term life insurance provides life insurance death benefit coverage on the life of an insured individual for a stated period or time, or the contracts “term.”
Dollar-for-dollar term life insurance provides the largest amount of death benefit protection per dollar of premium spent.
Term life insurance is a great life insurance solution when large amounts of death benefit protection are needed for short periods of time, such as when you are raising a family. Some term life insurance policies have additional insurance benefits, such as critical illness and disability income, attached to the contracts helping people cover more than just the risk of a death of a family breadwinner or business associate.
There are several forms of term life insurance to consider. These are:
Provides level death benefits for a level premium for stated period of time. Generally purchased for 10-15-20 or 30 years.
Provides level death benefits for a level premium for a stated period of time without having to be stuck by a needle and go through a full medical exam!
Provides level death benefits for a level premium for a stated period of time but will return 100% of the premium if the insured does not pass away during the life of the contract.
A hybrid of both term and permanent life insurance, Guaranteed Universal Life Insurance Policy provide flexible death benefit protection with flexible premiums. Policy will stay in force even as long as planned premium is paid.
How Term Life Insurance is Priced
One-year term life Insurance – The foundation of all life insurance.
One-year term life insurance is the most basic type of life insurance. It is the pure cost to provide insurance coverage to an individual at any point in their life. The cost of one year term is determined by using the insurance principals of risk pooling and the law of large numbers. As an individual ages, the cost per every $1,000 of insurance coverage incrementally increases.
Life insurance actuaries use one-year term life insurance as a foundation to manufacture all types of life insurance and is available for purchase inside of most group life insurance plans.
Level Term life insurance
For individuals looking to buy term life insurance coverage outside of a group life insurance plan, level-term life insurance is the most common form of term life insurance available. Level Terms are available for 5-10-15-20 and 30 year intervals.
The longer a policy’s level term period is, the higher the premium for the contract per $1,000 of insurance coverage. In the early years of a level term life insurance contract, a policy owner will pay more than the cost required to provide insurance. The insurance company will collect those excess premiums to offset the higher cost of insurance in later years of the policy. If the policy owner lapses the policy or the policy’s term ends without the insured passing away, the insurance company retains all money’s paid.
Policy Fees and “Banding” of term life insurance
All term life insurance contracts have a set policy fee included in the price of the contract. This is typically $60-100 dollars per year regardless of the policies face amount.
In addition, many insurance companies will reduce the cost per thousand dollar of insurance as the amount of death benefit in a policy increases. These “bands” cause a $1,000,000 10 or 20-year term life policy to require less premium than a $900,000 policy.
In most cases, rate bands for level term life insurance occur at:
- $1,000 to $99,999
- $100,000 to $249,999
- $250,000 to $999,999
- $1,000,000 to $2,499,999
- 2,500,000 and up
The option to renew coverage when the level term ends on a level term life insurance policy
When a level term life insurance’s “term” ends, many policies will grant the policy owner the option to renew coverage without having to prove evidence of insurability (i.e. – without having to prove the insured is in good health as would be required when obtaining new coverage.)
When this option is available, the premiums revert back to annually renewable one-year term life insurance. The premium rates an insurance company will charge for coverage in the future is unknown. They do however list the maximum amount they may charge at the policies inception.
The option to renew a level term life policy at the end of the level term period grants the policy owner an option to continue coverage especially if no other coverage is available (such as if they become uninsurable.) Not all level term policies carry this option. Talk to a Decision Tree Financial agent to ensure the policy you are considering has this option if it is something you believe you could benefit from.
The option to convert coverage to a universal or whole life insurance policy.
Many term life insurance policies grant the policy owner the right to convert all or a portion of the term life policy to a universal or whole life insurance policy without proving evidence of insurability. The converted policy will be priced based on the insureds age at conversion and their health when the original policy was issued. Some life insurance companies will provide a conversion credit equal to the last full years premium paid.
The option to convert is an important feature and can be helpful for those who will want cash value life insurance in the future but may not have the resources available today to make that commitment.
What Other Coverage’s Are Available With Term Life Insurance
Some term life insurance plans provide additional insurance benefits in addition to the standard death benefit protection many people think about when considering purchasing life insurance. These additional coverages can help manage other risks a policy owner may face. The additional coverages include:
- Accidental Death and Dismemberment
- Disability Income Benefits
- Critical Illness Benefits
- Spousal Rider
- Children's Rider
Who Should Buy Term Life Insurance?
Term life insurance is one of the most important tools you can use to protect yourself and your family. It’s affordable, it’s generally easy to get, and it can give you peace of mind in case of an unexpected death.
But term life insurance can also be used for business purposes.
If you have a business partner or a key employee whose loss would be difficult for your business, term life insurance can be used to buy out your partner’s share of the business if they die or help you company adjust if a key employee passes away. The cash provided by term life insurance’s death benefit can help keep your business running smoothly in the event of a death, and it can also help you avoid any potential conflict with your partner’s family. It can also protect any your other employees who depend on your business to support themselves.
Term life insurance is an essential tool for anyone who wants to protect their family or their business. It’s affordable, it’s easy to get, and it can give you peace of mind in case of an unexpected death. So don’t delay, get term life insurance today.
How Much Term Life Insurance Do I Need?
No one likes to think about their own mortality, but it’s an important consideration when it comes to life insurance. No one knows when their time will come, and no one wants to leave their loved ones struggling financially.
That’s where a product like term life insurance comes in. Term life insurance provides a death benefit that can help your survivors continue living after you’re gone. But how much life insurance do you need?
There are a number of factors to consider when determining how much life insurance you need. How many dependents do you have? What is your current income? What are your future earning potential? How much debt do you have? How much do you want your survivors to be able to maintain their current lifestyle?
Decision Tree Financial has an easy to use calculator that will tell you exactly how much life insurance you will need to provide your heirs so they can continue life and not have to worry about money.
You can work with that life insurance needs calculator by clicking here.
A term life insurance policy is often the best option for those who are looking for affordable coverage. A term life insurance policy provides coverage for a set period of time, typically 10-20 years. This can be a great option for those who have kids at home or other obligations that will eventually go away. And because term life policies are more affordable than whole life policies, they can be a good option for those on a tight budget.
Why Buy Term Life Insurance Policy From Decision Tree Financial?
When you chose to work with Decision Tree Financial to buy term life insurance, you will have the confidence knowing your going to get the best policy at the lowest possible overall cost.
We work with over 100 Term life insurance companies to find you the best life insurance policy for you at the lowest possible cost.
Find out how much term life insurance you need and see how much term life insurance costs with our easy to use, no obligation term life insurance quote tool that will give you actual prices from some of the life insurance carriers we work with.
