Term life insurance guarantees payment of a stated death benefit if the covered person dies during a specified period of time or term. Once the term expires, the policyholder can either renew it for another term, convert the policy to permanent coverage, or allow the policy to terminate. Renewal or conversion options may need to select as policy riders, and typically require an increased premium or decreased face value for coverage to be extended.
Age, gender, height-weight, and overall health are considered when prices are quoted. Due to the higher face values offered, term policies are more likely to require extended underwritings such as an MIB check, APS, or a paramedical exam (ordered and paid for by the insurance company). Driving records, tobacco status, medications, occupation, hobbies, or family history can come into play.
Policy premiums are often lower, and face values are often higher than whole life options. That’s because most term policies end without a death benefit being paid out. Unlike whole life, term policies do not have a cash-building component and have no value beyond the guaranteed death benefit. Even with these limitations, term policies are incredibly popular because they provide a lot of “bang for the buck.” Even better- some term policies offer Living Benefits riders such as Terminal Illness, Disability, or Waiver of Premium.
Term products are often used as Mortgage Protection tools, tailored to the amount of time and money it would take to pay off the family home. Employers may offer term products (sometimes on a guaranteed issue basis) as an employee benefit. Business partners can use term policies to fund Buy-Sell Agreements. Parents often choose term plans to replace their income and provide for future education costs. The policyholder may calculate that by the time the policy expires, their survivors will no longer require the extra financial protection or will have accumulated enough liquid assets to offset the loss.
United Agent Resources is skilled in helping agents select the right coverage option for each client. We help agents protect their client’s financial interests.
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