By Jim Doyle
Fortwayne.com :There are many kinds of life insurance, but they generally fall into two categories: term life insurance and permanent life insurance. Today, we will focus on term life insurance policies.
Term life insurance is in some respects similar to renting a home. When you rent a home, you get to take full advantage of the entire property immediately so long as you continue paying rent. As soon as your lease expires, you must renegotiate your lease or move elsewhere.
Even if you rented the house for 30 years, you have no “equity,” or value that belongs to you.
This concept can be applied when thinking of term life insurance. You establish a term, or amount of time you’d like life insurance protection for, and you will pay the premiums for this certain period of protection. At the end of the term, you can choose to renew at a new rate, discontinue protection or select a new policy.
Advantages of term life
One of the biggest advantages of term life insurance is the lower initial cost. However, as years pass and your policy comes up for renewal, you can anticipate the cost of term insurance to increase. To renew the policy, you may have to present evidence of insurability. If you’re still in good health, you might requalify at a reasonable rate. But if your health has deteriorated, you may find that with continually increasing premiums, it may be too expensive to renew your policy or you may not even requalify.
Term life insurance is often a good choice for young families or those on a tight budget. It allows them to buy higher levels of coverage when the need for protection is often greatest. Many times, term life insurance makes sense when you have a need for coverage that will disappear at a specific point in time. For instance, you may decide that you only need coverage until your children graduate from college or a particular debt is paid off, such as your mortgage.
On a cautionary note, often times insurance needs continue beyond these milestone events. Consider:
Can you achieve your financial goals without life insurance? Would your family be able to maintain the same standard of living without insurance? Would your financial plan, without life insurance, enable your spouse to maintain the lifestyle you worked so hard to achieve? Would you be able to pass on something to your children or grandchildren?
When considering term life insurance, make sure to consider product features as well as price. You may be able to add extra features or “riders” to your term life insurance policy. Some provisions include accelerated death benefits, disability waiver of premium and accidental death benefits. Additional fees may apply.
Another feature to consider is convertibility. This feature, usually available during the first few years after a policy is issued, allows you to convert to a permanent policy without submitting evidence of insurability. This may be useful to have if you realize you need coverage for a longer period than you originally thought.
Jim Doyle is an Allstate Personal Financial Representative in Fort Wayne.
Copyright 2005 Knight Ridder.
Fortwayne.com :There are many kinds of life insurance, but they generally fall into two categories: term life insurance and permanent life insurance. Today, we will focus on term life insurance policies.
Term life insurance is in some respects similar to renting a home. When you rent a home, you get to take full advantage of the entire property immediately so long as you continue paying rent. As soon as your lease expires, you must renegotiate your lease or move elsewhere.
Even if you rented the house for 30 years, you have no “equity,” or value that belongs to you.
This concept can be applied when thinking of term life insurance. You establish a term, or amount of time you’d like life insurance protection for, and you will pay the premiums for this certain period of protection. At the end of the term, you can choose to renew at a new rate, discontinue protection or select a new policy.
Advantages of term life
One of the biggest advantages of term life insurance is the lower initial cost. However, as years pass and your policy comes up for renewal, you can anticipate the cost of term insurance to increase. To renew the policy, you may have to present evidence of insurability. If you’re still in good health, you might requalify at a reasonable rate. But if your health has deteriorated, you may find that with continually increasing premiums, it may be too expensive to renew your policy or you may not even requalify.
Term life insurance is often a good choice for young families or those on a tight budget. It allows them to buy higher levels of coverage when the need for protection is often greatest. Many times, term life insurance makes sense when you have a need for coverage that will disappear at a specific point in time. For instance, you may decide that you only need coverage until your children graduate from college or a particular debt is paid off, such as your mortgage.
On a cautionary note, often times insurance needs continue beyond these milestone events. Consider:
Can you achieve your financial goals without life insurance? Would your family be able to maintain the same standard of living without insurance? Would your financial plan, without life insurance, enable your spouse to maintain the lifestyle you worked so hard to achieve? Would you be able to pass on something to your children or grandchildren?
When considering term life insurance, make sure to consider product features as well as price. You may be able to add extra features or “riders” to your term life insurance policy. Some provisions include accelerated death benefits, disability waiver of premium and accidental death benefits. Additional fees may apply.
Another feature to consider is convertibility. This feature, usually available during the first few years after a policy is issued, allows you to convert to a permanent policy without submitting evidence of insurability. This may be useful to have if you realize you need coverage for a longer period than you originally thought.
Jim Doyle is an Allstate Personal Financial Representative in Fort Wayne.
Copyright 2005 Knight Ridder.
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