Employee Life and Disability Insurance

Term Life Insurance

Term life insurance offers death benefit coverage for a certain amount of time. If the life insurance is for a limited time period, term life insurance is usually the way to go.

Term life insurance can be used to cover a family financially when there are large expenses that need to be covered such as for education, a mortgage, or car loan.

Term life insurance is the least expensive of all life contracts and offers a lot of protection.

Here are the facts about term life:

• Term life insurance offers death benefit coverage for a certain time period (typically between one and 30 years).
• Term life insurance only pays a death benefit to the beneficiaries if the insured passes away during the policy term. The coverage ceases at the end of the term unless the policy is renewed.
• The death benefits are tax-free to the beneficiaries.
• Term life premiums are more affordable than traditional whole life insurance premiums. However, premiums rise based on the age of the insured at policy acquisition.
• As long as the premiums are paid, the policy cannot be canceled.

Types of Term Life Insurance

Let's look at different kinds of term life insurance: level term, decreasing term, renewable term and convertible term.

Level Term

Level term life insurance offers death benefit protection that remains constant for the term of the contract. However, if the insured develops a medical condition, coverage may be denied if they want to extend it after the initial term ends.

Level term life can benefit those who cannot afford permanent insurance as well as those who want to make sure their family can meet current financial obligations upon their death.

Decreasing Term

Decreasing term life insurance provides death benefit protection which decreases each year. The most common use for decreasing term is to cover needs that will decrease over time, such as mortgages and other loans. The premiums stay the same, but the death benefit decreases each year.

Renewable Term

Renewable term life insurance guarantees that the insured will be able to renew the policy at the end of its term without requiring evidence of insurability. The renewability is typically made as a provision in the policy. When the policy is renewed, premiums can go up because the current age at renewal is used to calculate the premium cost.

Convertible Term

Convertible term life insurance is term life with a convertibility provision. A convertibility provision permits a switch from term life to a permanent policy later on without requiring evidence of insurability.