Term Life Insurance

Term Life Insurance

• Life Insurance company, or Insurer promise to pay a death benefit if the life insured dies within a fixed term or period
• Typical terms available – 10,20, or 30 years, however other term lengths do exist
• Just a pure risk coverage (no savings portion)
• Coverage is guaranteed to remain in place if premiums are paid
• Coverage usually terminates between age 75-80
• New policies are not issued beyond age 75
• Plans available on Single life or multiple lives:
  • Joint-first-to-die – This type of policy support to payoff mortgage, debt, buy/sell agreement
  • Joint-last-to-die – This type of policy support to payoff capital gains taxes on second death
• Death Benefit Options – Level (most prevalent), Decreasing (mortgage insurance), Increasing (inflation hedge) face amount
• Premiums: Level over the term
• Payment mode: Annually, or Monthly

Renewable Options

• Plan can be renewable or non-renewable
• Renewable – Policy owner is guaranteed the right to renew for another term without having to provide evidence of insurability
• Renewable premiums will increase at renewal time, but they are guaranteed and printed in the contract at time of original issue

Convertible Options

• Right to convert term insurance plan to a permanent insurance plan (Term to 100, Whole life, Universal life insurance) without proof of continued insurability
• New premium is based on either Attained age or Original Age