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Life Insurance 101

Term Life insurance provides to the insured’s beneficiary a specific benefit at their death. Generally there is no  cash value accumulation in the policy.  Follow link to see a Rate Table

Characteristics                 

1. Rates are generally Guaranteed and Level for 5 to 30 years.
2. Policies generally are renewable without going through medical underwriting after the fixed term period however the cost is drastically higher sometimes 10-20 times higher.
3. Most all policies have conversion features to permanent coverage.
4. The conversion features vary and have different restrictions

                                                               i.      Sometimes there is a premium credit at conversion

                                                             ii.      Sometimes you can only convert to a permanent policy through the level premium period.

                                                            iii.      Some carriers restrict the conversion to a specific permanent policy

Things to consider when purchasing Term Life

1.      Why are you purchasing the coverage?

a.       Replacement of income

b.       Pay off debt

c.       Fund for children’s education

d.       Fund for beneficiary’s retirement

e.       Business Buy Sell Agreement

f.        Estate creation

2.      How much coverage do you need?

a.       A simple calculation usually is 7-10 times your income.

b.       PFSI/DIS could also run a needs-analysis.

3.       How long do you need the coverage? 10, 15, 20, 30 years or longer?

4.       Will you need coverage after the fixed Term?  If so how much?

5.       What are the financial ratings of the carrier?

6.       What are the conversion features?

7.       How competitive are the permanent policies that the term can be converted to?

  Follow link to see a Rate Table