You probably have heard of the word "term insurance" before. It's a clever little word implying the length of time (or term) that you want the insurance policy to last.
Ok, maybe it's not that clever.
But let's say you have a 30 year mortgage and you would like to make sure the debt is paid back in the event you don't make it home from work (you pass away). Because you love your family so much, you take out an affordable 30 year life insurance policy that covers the loan amount. Some people refer to this as Mortgage Insurance.
The great thing about term life insurance is that it is the least expensive option for covering your family. Or in this case, insuring your mortgage.
You get to choose the length of term you want. Most insurance companies offer 10 year, 20 year, and 30 year. Some will even offer obscure term periods like 23 years or 17 years. It's all customizable.
Also, the premiums are locked in at your current age. So the younger you are, the cheaper it will be. So when you buy a 30 year term policy, the premium (the amount you pay) is guaranteed to be the same price for 30 years! Can you think of ONE thing that is the same price today as it was 30 years ago? Probably not.
There are no commitments, either. So if you pay the mortgage off earlier, or your situation changes, you can always decrease the coverage or cancel anytime, without penalty.
How much do I need?
This really all depends on several factors. Many people want to make sure their family and loved ones can maintain the standard of living they've become accustomed to.
One way to make this happen is to insure your paycheck. Make sure that you have enough life insurance to replace your income. Here is a good rule of thumb
$1,000,000 life insurance policy = replacing a $50,000 annual income
So if you make 25k per year, you need about $500k in coverage. If you make 100k per year, about $2 million in coverage. It's just a guideline. And perhaps an over-generalization. But the most important thing is that you have something in place. Something is better than nothing.
Here at Rethinking Life Insurance, we have access to dozens and dozens of the top A rated Insurance Companies to help you find the most affordable and best option. We don't have just one company to offer like many traditional life insurance agents. We can help you buy from whichever company you want.
The reason this is important is because insurance companies are fighting for your business. So they're competing against each other on price. Since we have access to all of these companies, we help facilitate this so you don't have to contact each and every company and manually compare one at a time.
Start here and to get an idea on price. We also know which insurance companies offer a "no-exam" option so you can get covered quicker.
Upgrading to Permanent Coverage
A lot of insurance companies will give you the option to upgrade all or part of your existing term life insurance policy to a permanent form of coverage.
This is commonly called "Conversion." Or having a conversion privilege.
The reason this is so valuable is because this conversion option always you to upgrade without having to prove your health is good again. In other words, if your health has negatively changed, and perhaps you're no longer eligible for more coverage, you can still upgrade to a new permanent policy that will stay in force forever. No questions asked.
Not every term policy or insurance company offers this, but most do. So it's important to talk with a licensed professional to make sure the policy you choose has this benefit.
Age restrictions for Term Life Insurance
Typically, most Insurance Companies will allow term coverage to start at age 18. Of course you can get permanent life insurance starting at just 15 days old.
The cost is so cheap at that age, that it wouldn't make economic sense to buy a term policy younger than 18 anyway.
The maximum age for a term policy is usually around 70 or maybe 75. Although a permanent policy would be more costly, it's definitely worth a conversation to see if it would fit your situation better than a term policy.
We tailor fit a life insurance policy specifically for you. Life insurance is not a one size fits all. Every single person has a different and unique set of circumstances. So don't "go it alone." We're here to help. And our phone consultations cost you nothing.
Living Benefits with Term Life Insurance
Many people are concerned about having a critical illness of some sort. Every 43 seconds someone has a heart attack.
There are a handful of insurance companies that allow you to accelerate a portion of the death benefit amount if you suffer a critical illness. There are many types of illnesses that qualify. But please talk with us so we can help you choose the right policy.
Terminal illness is another category that allows the acceleration of the death benefit. Most require documentation that you have a life expectancy of 12 months or less. Some carriers allow up to 24 months. Just about all insurance companies have this benefit, but some have obscure exclusions.
Chronic Illness is the third type of living benefit endorsed by an insurance company that allows for the acceleration of the death benefit if you cannot perform two of six Acts of Daily Living.