Term insurance is life insurance that is purchased at a specific cost for a specific period (1 year, 5 years, 10 years, to age 65, etc.). It is insurance in its purest form, with no “savings component”, thus there is normally no cash surrender value if the policy is canceled.
- Term insurance should be used when a specific amount of coverage is required for a specific period of time and when available cash flow relative to your personal financial strategy is limited.
- Consideration must be given to choosing a life insurance company that is financially secure, with “competitive rates” being a secondary consideration. For example, a company offering the best rates may be a company that is not regarded as being financially sound.
- If future cash flow is anticipated to improve, term insurance could be acquired with an option to convert to permanent life insurance at a later date. If conversion is contemplated, additional care should be taken to choose a quality insurance company that offers quality products to which conversion may be available.
- To determine which type of term insurance (1, 5, 10, 20 Year or to age 65) would be the most cost effective for a specific situation, it’s important to analyse the total cost of various plans over the course of the required time frame.
- Features of the plan should include renewability, convertibility, guaranteed renewal rates, and disability waiver of premium. Hence, the most feature
- One option on your term insurance plan could include “disability waiver of premium” which pays the premiums if you sustain a long term disability.
- Another option to consider is a “guaranteed purchase option” which allows you to buy additional coverage in the future even if you become uninsurable.
Contact us today to learn more about term life insurance.
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