A term life insurance policy is often referred to as pure protection, since all you are buying is a death benefit. In a way you are renting protection for the term or life of the policy, say 10 years. If you die during that time, the policy will pay its death benefit.
To make a term insurance policy marketable there are a few elements that make it more like renting an less like “pure” protection.
The premiums are level from the day you buy it until the end of the term. If you actually paid the real corresponding costs your payments would rise each year. In that case, if there was any chance that you could be convinced that you no longer needed the insurance, you would drop it and the company would not make very much money.
Most term life insurance policies are guaranteed renewable before or at the end of the initial term. Insurance companies know that your needs for insurance will last for as long as you live, so they want you to keep paying for insurance far beyond that initial term period.
The benefit to you of the renewable feature is that you don’t need to prove to the insurance company that you are still “insurable” in order to keep the term insurance policy in force for a longer period than the original term. Naturally, each time you renew, the premiums will be higher for the next period of years because you are older and, therefore, more likely to die.
Another feature, convertibility, is usually part of the policy as well. In my opinion the convertibility feature is vital and something the terms of which must be clearly understood by you and your advisors in order to make sure the policy is a flexible as you will need it to be.
The convertibility feature means that the term insurance policy can be exchanged for another type of life insurance usually at any time before the expiration of the policy’s term. Buying a convertible term life insurance policy will put you in control since will be able to convert to a permanent type of coverage at a later time, without having to prove that you are still insurable.
Usually people choose term insurance for protection when the need for it is only temporary, such as mortgage protection, business bank loans and trade account protection required by a vendor, or perhaps as income replacement when their children are young. There are times when the requirements for immediate cash protection in order for them to keep the commitments they have made if they were to die make term insurance the only possible solution.
In other words term life insurance is a permanent solution for a temporary need. And it is a temporary solution for a permanent need.
You can figure out how much you need and get a quote online. You can buy term insurance through the mail and never have to speak with an agent. The Internet sets you free to get what you want when you want it and pay almost whatever you want.
The question is, does that make the most sense for you, your family and your business? Isn’t it possible that a trained agent who has spent a lifetime helping people like you will have insights and experiences to share that you can benefit from? Remember, when you buy life insurance commissions will be paid to someone. Should that be a wholesale aggregator with a web site or a trained professional you trust who has to look you in the eyes for as long as you all shall live? You decide.
Remember, term life insurance is like wetting the bed, it provides instant relief but sooner or later you are going to have to get up and do something about it. I remember the first time heard that expression. Now that thirty years have passed I understand what he meant.
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