Term Life Insurance: Basics
Term life Insurance is a life insurance policy that provides coverage for a limited period of time, or term.
Once the length of term is chosen the premium is then fixed for that period of time.
In other words the amount you pay never changes. You determine if you pay monthly, quarterly or yearly.
The term can be as short as one year but typically ranges from between 10 to 30 years depending on your age and insurance needs.
What happens when you have a policy like this is that in the event of a death, the life insurance company then pays the beneficiary, or the person you have designated, the amount of the policy.
Often times people want life insurance in order to protect their family financially in the event of an unexpected death-these policies offer peace of mind.
Think about it, if you are the main provider and married with 3 young children and you die, will your family be able to survive financially?
This is often when life insurance can provide that stability.
There are 2 main types of life insurance; Term and Permanent/Whole life.
Term life insurance is more common.
Who needs term life insurance?
- If you have a family or people are dependent on you financially- you need a life insurance policy.
- You may be single but have debt; a term policy would cover that should you die. Some examples are; loans, a mortgage, student loans.
- It can offer coverage for funeral expenses. Often a funeral can be 10K-40K.
- You may have an essential employee that if he/she dies would harm the success of a company.
- Maybe you have a business partner and in the event of a death you need funds to pay out the deceased partners family or heirs.
Why would I pick term life insurance?
- You typically get more coverage for the money.
- Often cheaper than a permanent policy.
- Premiums are set-your payment never changes.
- Policy covers only a set amount of years- typically with a family you need coverage until after your children graduate. You may not need coverage forever.
- Easy to obtain.
Why would I NOT want term life insurance?
- If you have enough money in savings/stocks/retirement to sustain your family if you die- you don’t need life insurance.
- Maybe you are single and have no debts and have funeral costs covered- you don’t need it.
- No one is dependent on you.
Why would I choose a Permanent/Whole life policy over Term?
A permanent policy is designed for coverage your whole life- not a set time limit or term.
Often times these policies are used for;
- Wealth transfer-your beneficiary may be children/grandchildren.
- Clients that want to spend a bit more on premiums but then have peace of mind that they have coverage forever. With term, at the end of the policy term, you must apply for a new one. Often times you have a change in you health status and your new policy may be much more expensive. A permanent policy is guaranteed forever, no matter what health issues come up. Some people prefer that guaranteed coverage.
- These policies offer more options; such as income replacement or payouts should you need money later on in life. See, in short, your premiums are invested and so sometimes in retirement clients can take money out against the policy for different needs.
These policies offer more financial options long term.
When a term policy is up and if no death- no money is ever paid out.
Need an example?
John is a 40 year old male- his health is great.
He has purchased a term life insurance policy that will run for 30 years.
30 years will get his children out of college and he and his wife will be retired. He has figured out that a $1,000,000 is right for his needs.
This sum will be payable to his loved ones in the event of his death during the policy term.
He is paying an agreed amount of $99 per month for this coverage with a top rated company such as Omaha Life.
John doesn’t have to worry about his family having a place to live- his mortage is covered. He knows that his children will be able to afford college if he dies.
He has choosen a term life insurance policy to protect his family.
The bottom line is that term life insurance is very inexpensive and easy to obtain.
It offers peace of mind financially for your family.
Isn’t that what we all want!!
What are the steps to getting a policy?
- Decide if a term/permanent policy is right for you.
- Determine the amount of coverage you need- typically 10x your yearly income.
- Pick a top rated insurance company to apply with- this is where you need a guide. Our agents know which companies will fit your needs.
- Fill out an application.
- If healthy you may qualify for a NO Medical Exam policy but often times a quick, in home medical exam helps save on premiums.
- Request your medical records for the insurance company to review. This is how they determine your rates for coverage- based on your health.
- After review, the insurance company will offer their rates/premiums to cover you and if you agree-you pay the premium and you are covered!
- This may seem like a lot of steps, I know…I thought so too when I first got into this.
We help make it easy- we help you every step of the way!
Why should I go through an insurance agent?
You don’t always have too…
It’s very easy to find a NO MEDICAL EXAM, quick term life insurance policy. Tons of websites offer that- we do too.
These no exam policies are especially easy for someone young and healthy.
You input your desired amount of coverage, answer a few simple health questions..boom!
You have a policy.
But what you may not realize is;
- You may pay more with these “instant” policies.
- If you have health issues, even minor ones like obesity or high cholesterol-you may get denied.
As experts in life insurance we can help you avoid all these hurdles.
We offer all the same polices just like going directly through a specific insurance company.
Same deals same rates.
Your benefit in letting us guide you is that we help you shop not just 1 company- we shop all the companies for you!
Our goal is to help you find the right coverage at the best rates.
If you choose us or a HUGE insurance company, you still get the same rates- we just offer you amazing customer service!
When you call…we answer the phone, personally.
“Hi!” this is Greg…
after your policy is in place, we are here year after year to answer any questions that arise.
Our hope is that you will be our client forever!
We are a small, family owed business but with a goal to provide the very best to all our clients.
Let us help YOU check this off your to-do list!