April, 30 2017

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Term Life Insurance Review 2016

Term Life Insurance Review 2016

  • Term Life Insurance

Today I wanted to do a review of term life insurance for 2016. Term life insurance is recommended by many of the top financial advisors in the country such as Suze Orman, Dave Ramsey and Clark Howard. First, let’s start off by defining what term life insurance is. Here is a great definition from Wikipedia: term life is life insurance that provides coverage at a fixed rate of payments for a limited period of time, the relevant term. After that period expires, coverage at the previous rate of premiums is no longer guaranteed. The reason why term life insurance is so popular and highly recommend by the preeminent financial advisors mentioned above is that term life insurance provides the most amount of life insurance protection and at the best price, typically at pennies on the dollar. This is why term life is often recommended over whole life insurance as it provides much more life insurance and at much a lower price which is what most families need, especially during their prime working years. For most people, at a certain time in the future the kids are grown, the house is paid off or paid down and many are closer to retirement, therefore the need for life insurance is reduced or even eliminated. If one still needs life insurance at this stage in life, they can apply for a new policy to accommodate the needs at this time as long as they are still in good health or convert their term policy to permanent insurance if they are not. Also, the difference in premiums between term life and whole life, it’s recommended (by the advisors mentioned above) to save that money and invest the difference yourself.

 

Term Life Insurance Review 2016- Pros & Cons

 

Pros: Inexpensive– Term life insurance will provide the most amount of life insurance protection at the lowest price.   Fixed Rate During the Term– The rate is fixed during the term and cannot change for any reason such as age or health. You choose the term which range from 10 to 30 years. No Cancellation Penalty Also, you can cancel term life insurance at any time without a penalty. Conversion Option– Most term life insurance policies have an option to convert the policy to permanent insurance during the term or before a certain age, usually age 70. No Waiting Period– Coverage begins once approved (temporary insurance is available during underwriting) and there is no waiting period. The only exclusion on term policies is a suicide clause in the first two years along with a two year contestability clause if one lied on their application and died in the first two years.

Cons: The only real drawback to term life insurance is that the rate is only fixed during the term and will increase when the term is over if you choose to keep the policy. For those who need permanent insurance then term may not be the best option.

 

Term Life Insurance Information

 

Term Lengths:

10, 15, 20, 25, 30 years

Sample Prices

40 Year Old Male $500k 10 Year Term $17.46 month MetLife

20 Year term $29.95 month Protective Life

30 Year term $53.95 Protective Life

Price Breaks

$100,000, $250,000, $500,000 $1,000,000, $1,250,000 $1,500,000 $2,000,000

 

Typical Uses for Term Life Insurance and Recommended Term Policy

 

Kids Graduate High School or College

10, 15, 20 or 25 year term

Mortgage Paid Off

10, 15, 20, 25 or 30 year term

Retirement

10, 15, 20, 25 or 30 year term

Business Loan

10 year term typically

Divorce Agreement

10, 15 or 20 year term

Key Man Policy

10, 15 or 20 year term typically

 

Conclusion: Term Life Insurance Review 2016

Term life insurance is the usually best type of life insurance to protect your loved such as a spouse or children during one’s prime working years. Term life insurance provides the most amount of life insurance coverage at the lowest price. Since most people need financial protection for a designated period as mentioned above, term insurance is often the best policy. For others who need permanent insurance such as a senior that needs burial insurance or someone who has a high net worth and needs to cover estate taxes then a whole life insurance or universal life insurance policy may be more prudent. This concludes our review of term life insurance 2016.