Don’t know where to start when it comes to life insurance? You can find all the answers to your questions about term life insurance described here.
Term life insurance means you pay a fixed payment over a set period of time, usually monthly for a period of 10, 15, 20 or 30 years. If you die during that time, your beneficiary receives the financial amount of your policy.
If you are alive after the term is up, coverage either expires or you can renew with a new term. But your rates will change.
There’s a lot more to know about term life insurance. Let’s dive into some top questions!
- What’s the Difference Between Whole and Term Life Insurance?
- What Happens to My Term Life Insurance After It Expires?
- Should Seniors Get Term Life Insurance?
- Does My Beneficiary Have to Pay Taxes?
- I’m Young! Do I Need Life Insurance?
- Key Benefits of Term Life Insurance Described
- What If I Miss a Payment?
- What’s a Rider?
- Where to Find the Cheapest Term Life Insurance
What’s the Difference Between Whole and Term Life Insurance?
Term life insurance is valid for a set period of time, chosen at the time you start your policy. Typically this is anywhere from 10 to 30 years.
Your rate is guaranteed not to increase during this time. After the term is over, your coverage expires and you will need to get a new policy. You can often convert your current one to a permanent policy too.
Whole life insurance is a policy that lasts for the rest of your life. It’s not fixed to a specific start and end date.
Each type has their pros and cons, and the right fit will depend on each individual’s situation.
What Happens to My Term Life Insurance After It Expires?
After your term is up, you have several options.
Many plans offer an extension of the insurance policy after your term expires. Companies call this their conversion policy or name the policy as convertible term life insurance.
Each insurer handles conversions differently. They will tell you your options for converting to permanent insurance at the time of expiry.
You can choose to keep paying on your current level of coverage but it will be at a much higher price per month.
This is because as we age, health typically declines. Your risk profile for bad health is much higher at the end of your term policy than when you started it.
If you’re still in good health, you may be able to qualify for a fairly comparable rate. If you’re in poor health at the end of your term, unfortunately, your rate will jump quite a bit.
Should Seniors Get Term Life Insurance?
This is a question each person needs to decide for themselves. All situations are different.
Term life insurance can be a good idea for seniors in many situations.
If your current policy’s premiums are increasing, it makes sense to shop around for a new one.
Your needs also may have changed. If you have enough savings to pay for final expenses like a funeral or estate fees, you probably don’t need life insurance.
If you still owe money on your mortgage or other debts or have medical bills to pay, life insurance is a good idea.
Term life insurance described in increments of 10 to 30 years with no medical exam is ideal. The length of the term depends on your life expectancy and budget.
The shorter the term, the lower the premiums.
Does My Beneficiary Have to Pay Taxes?
No, most term life insurance policy benefits are provided tax-free to the beneficiary.
The exception to this rule are policies where the death benefit is paid in installments. If it is, those installments are taxable.
Lump sum death benefit payments are always tax-free.
I’m Young! Do I Need Life Insurance?
Most likely, yes.
If anyone relies on you for income to maintain their standard of living, or if you have any debt, you could benefit from life insurance.
Most young people start to think about insurance after having their first child. This is definitely a good reason!
Key Benefits of Term Life Insurance Described
Term life insurance is easy to qualify for. Many insurers offer policies with guaranteed acceptance and no medical exam.
It’s also the cheapest form of life insurance, compared to permanent or whole life insurance. It’s cheaper because it’s for a relatively short period of time instead of your entire life.
Term life insurance is great for temporary coverage. An example would be for a growing family.
Financial needs for your family may change over time. A short ten-year policy will ensure you’re covered until your needs for a permanent life insurance plan are figured out.
We make it easy for you to get instant quotes from top insurers and easily apply online for the types of term life insurance described in this article.
What If I Miss a Payment?
If you stop paying your life insurance policy premiums, your policy will become void. You will not receive any of the death or other financial benefits from your life insurance.
Most policies have a grace period for late payment forgiveness, typically around 30 days. Before signing your policy, you should ask what their grace period is. You should also ask and what happens to your policy if that grace period passes.
What’s a Rider?
A life insurance rider is an add-on to your policy that changes the terms of it.
Term life insurance described as a complete solution can still benefit from riders.
Common examples of riders are:
- Permanent disability, which means you don’t have to pay the monthly premium if you become disabled and can’t work.
- Guaranteed insurability, which means you cannot be denied coverage for any health reason.
- Accelerated death benefit, which allows you to collect a portion of your policy’s overall death benefit if you become terminally or critically ill.
- Accidental death benefit, which pays out an additional amount on top of your policy’s death benefit if you die from accidental causes.
Adding riders to your term life insurance can significantly increase your premiums. Be sure to do your research before accepting them.
Where to Find the Cheapest Term Life Insurance
Price is important, but shouldn’t be the only factor when deciding on term life insurance. Our website makes it easy to find your next policy.
You can find a list of the 25 top rated term life insurance companies, get an instant quote and apply online right here!