Why do I need term life insurance?
Term Life Insurance plays a vital role in proper financial planning. The most common reasons to buy Term are as follows:
- You have a temporary need which lends itself to a temporary solution, i.e., raising children, education, paying off a mortgage, a business buy/sell agreement.
- You have a permanent need for protection (such as liquidity for the purpose of paying estate taxes), but since term is initially less expensive, it fits better into your current budget. You might want to purchase a term policy with the intention of converting to permanent protection later.
In addition to helping to support dependents, life insurance can help provide immediate cash at death. Insurance proceeds are a handy source of cash to pay the deceased’s debts, funeral expenses, and income taxes.
Stay-at-home moms or dads also have an important, often overlooked, economic value that should be covered by life insurance.
I have never heard of the company recommended. Should I still consider their plan?
All carriers that we represent are top quality carriers with AM Best ratings of A-, A, A+, or A++. These are considered to be “excellent” or “superior” ratings and signify their strong ability to meet the ongoing obligations to policyholders. Though you may not be familiar with a company’s name, we have the greatest confidence in the carriers we recommend and are proud to represent them.
How do I know how much life insurance I need?
Life insurance is designed to replace you, financially speaking, if something happens to you. Therefore, the amount of insurance you need should be calculated by the gross annual income required by your dependents.
Use our Life Insurance Calculator to determine the money needed for your dependents replacement income.
Is a medical exam required?
A basic paramedical exam is required for most term life programs. The exam is very simple and takes approximately 15-20 minutes and is free of charge. The examiners will typically request a blood and urine specimen, take your blood pressure and ask questions concerning your medical history. Examiners are not licensed insurance agents and are unable to assist with questions regarding your application. Please don’t hesitate to contact us with any questions or concerns.
Will my beneficiaries have to pay income tax on my policy’s death benefit?
Your death benefit will generally be free from income taxes. It is guaranteed as long as the policy remains in force.
How do I know what length of term to select?
Every life situation is different, so you will need to take your personal obligations into account. Things to consider could be the number of years you have left on your mortgage, if you have children, or the number of years until they complete college. For example, if you have young children and plan to send them to college, you may want to consider at least a 20 year term life policy.
What coverage does term life provide?
The standard term life policy covers death by any cause at any time in any place, except for death by suicide within the first two policy years (one year in some states), as long as it is within the term of your policy.
Can I convert my policy from term to permanent?
If your needs change, so can your coverage; you can convert all or some of your term coverage to a permanent policy for a lifetime of coverage—without a physical, and with no medical questions asked.2
What are some of the reasons for converting to a permanent life insurance policy?
- If you take on debt later in life to pay for a child’s or grandchild’s college education or to buy a vacation home
- If you inherit or build significant wealth and need to plan for taxes and estate settlement costs.
- If you want to maintain protection and build tax-advantaged cash value within your policy to supplement your retirement income3
Are there optional features that can be added onto a term life policy, and is there a cost associated with these features?
You can enhance your coverage with these optional features called “riders” for an additional cost:
Protection in case of disability
Waives your payments if you become sick or disabled, so that coverage continues.
Protection in case of disability with conversion option
Waives your premium if you become sick or disabled, and also allows you to carry over this benefit to your new policy if you convert to permanent insurance.4
Early payment in case of illness
With an accelerated Death Benefit, you can take a cash advance from your policy if you are terminally ill.