If you’re looking for a cost-effective way to help provide financial security for your loved ones after you pass on, Term Life insurance might well be your best bet. Here’s how it works: You take out a policy on your life for a fixed “term” or number of years. The other major type of Life coverage, Permanent or Whole Life, remains in force as long as the policyholder lives.
The amount of coverage or death benefit depends on your personal situation (age, marital status, and number of dependents) and financial circumstances (income, short-term debt, home mortgage, etc.). You should choose an amount that will replace your lost income and pay down debt for your survivors.
Before writing a Term Life policy, the insurance company will probably require you to pass a medical examination. The test results will affect your policy premium — such factors as smoking, obesity, and hypertension lead to higher rates. As a rule of thumb, the younger you are, the lower your annual rate.
If you have a health condition that keeps you from buying regular Term Life, you might prefer to buy “guaranteed issue” or “quick issue” coverage, which does not require a physical. However, in this case, the insurance company will protect itself against the increased risk of covering you by charging a higher premium and perhaps setting a yearly fee.
Term Life premiums either go up every year or can be set at a fixed rate (“level premium”).
The professionals at our agency will be happy to provide a review of your situation and recommend Term Life coverage tailored to your needs.