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 contract’s term.”
Dollar-for-dollar term life insurance provides the greatest death benefit protection per dollar of premium.
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 the 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 a one-year term is determined by using the insurance principles 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 for all types of life insurance, and it is available for purchase in most group life insurance plans.
Level Term life insurance
For individuals looking to buy term life insurance outside a group plan, level-term is the most common option. 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 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 insurance costs 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 paid.
Policy Fees and “Banding” of term life insurance
All term life insurance contracts include a set policy fee in the contract price. This is typically $60-100 dollars per year, regardless of the policy’s face amount.
In addition, many insurance companies will reduce the cost per thousand dollars 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 cost less 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 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 policy’s inception.
The option to renew a level term life policy at the end of the level term period allows the policy owner 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 Insurance agent to ensure the policy you are considering includes this option, if you believe you could benefit from it.
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 insured’s age at conversion and their health at the time the original policy was issued. Some life insurance companies will provide a conversion credit equal to the last full year’s 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 offer additional benefits beyond the standard death benefit protection that many people think of when considering purchasing life insurance. These additional coverages can help policy owners manage other risks they 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, generally easy to obtain, and can give you peace of mind in the event 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 your 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 of 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, easy to get, and can give you peace of mind in the event 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 choosing a life insurance policy. 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 is 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 Insurance 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 the life insurance needs calculator by clicking here.
A term life insurance policy is often the best option for those seeking affordable coverage. A term life insurance policy provides coverage for a set period, 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 choose to work with Decision Tree Insurance to buy term life insurance, you will have the confidence knowing you’re 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.
