Deciding to get life insurance coverage is only the first step. There are many different types of life insurance policies, including term life. So what is term life insurance and who is it best suited to? Well, that’s exactly what we’ll explore in today’s article from Tenaya Insurance Services.
What is Term Life Insurance?
A term life insurance policy is a policy that covers you for a specific length of time before expiring. The term can range anywhere from one year to 30 years. If you are still alive when the term life insurance policy comes to an end, then there will be no benefits paid out. You and the insurer typically part ways or you may opt to get a new policy at that time.
Unlike a whole life insurance policy, term life insurance policies hold no cash value. As such, term life insurance policies tend to be more affordable than a whole life insurance policy, which retains cash value and covers you until the end of your life (or until you opt to drop the policy.)
If you do not want to take the risk of paying a monthly premium on a policy that may not ever offer any benefit, you may want to opt for a return of premium or “ROP” term life policy. A ROP term life insurance policy does have a slightly higher monthly payment, but if you are still alive when the term comes to an end, some or all of the money that you paid into the policy will be returned to you. You can choose between an ROP policy that pays just a percentage of the premium back to you at the end, or you may opt for a policy that pays out the entire sum. It’s a bit like a savings account that pays out a larger sum if you were to pass away.
It’s also important to note that some term policies have a premium that stays the same for the entire life of the policy, while others have premiums that increase annually or at other set times throughout the life of the policy.
Additionally, level term life insurance policies have a stable death benefit that remains the same throughout the entire life of the policy. On the other hand, a decreasing term life insurance policy would decrease incrementally over time.
Term policies can be a low-cost way to give a boost to your overall level of coverage, especially during times in your life where you have young children at home, you have a mortgage that you’re still carrying, college savings you want to be able to provide for if your income is suddenly gone. Then, once you no longer have dependent children, a mortgage and other major expenses, you can simply drop the policy.
The downside to term policies is that there is a good chance you may outlive your insurance policy. This poses a problem because life insurance policies are based upon age, so the younger you are when you purchase it, the lower the rate you can secure. This rate is usually locked in for life. So if you got a policy at age 30, you would pay far less on a monthly basis than if you were to lock in a policy at age 50. There’s also a risk that you could develop a health condition that makes it impossible for you to get coverage down the road. So these are all vital points to consider.
Turn to Tenaya Insurance Services for Your Life Insurance Solutions
Life insurance isn’t just for leaving money behind for your family after you die. There is so much more that can be achieved with life insurance, including tax benefits, retirement planning and benefits, funding cryonic preservation, saving for college, planning for a special needs child or other loved one, providing disability and income protection and beyond.
But finding the right type of insurance can be a challenge. This is exactly where Tenaya Insurance Solutions can assist, as we’re here for all of your life insurance needs and beyond.
Tenaya Insurance Services is here to meet all of your insurance needs. To schedule a phone consultation or live video chat, click here. You can also get started by completing our new client form. Or, contact Tenaya Insurance Services by clicking here to call 800.387.2567.