How term life is sold in the market place
When should you consider taking out term life insurance?
Term life insurance is ideal for covering debts or other short-term insurance needs in the event of your premature death. For example:
• To cover the education costs and ensuring the financial security of your kids until they leave home.
• Pay off the mortgage on the family home or cottage, where your kids had so much fun and which are full of memories.
• To pay off your student loan.
• To pay off other debts, such as a car loan, credit card balances, etc.
• To buy the shares of a deceased business partner without putting the financial heath of the company at risk.
• To provide a short-term alternative when you cannot afford long-term coverage.
Term life is sold on its own or combined with other kinds of life and health insurance coverage.
It’s also possible to get term life coverage through a universal life product and thereby enjoy more advantages and flexibility.
The term is the duration of the temporary insurance coverage. The terms most frequently offered on the market are 1, 5, 10, 20 and 100 years.
Renewable means you can renew your insurance coverage at the end of each term for another one. This can be repeated up to a certain age, at which time the coverage will cease. You should check:
• Whether you have the right to renew and, if so,
• Whether you can renew without having to provide evidence of insurability, and
• The age up to which coverage can be renewed.
Convertible means you have the right to convert the term life coverage into permanent coverage that will cover you for as long as you live without having to provide evidence of insurability. You should therefore check:
• Whether you have the right to convert and, if so, up to what age, and
• Whether permanent coverage premiums are preset and guaranteed for life.
Insuring other people
Perhaps you want other people, such as your spouse or business partners, to be insured under your term life coverage. If so, make sure you have the flexibility of the following options, just in case:
• Each person can be insured individually, but under the same term life policy;
• Each person can be insured jointly with the others on a first-to-die or last-to-die basis.
What exactly does a guaranteed premium mean? To determine if your premium is guaranteed, answer the following questions:
• Are the term premiums fixed and locked in for the duration of the selected term?
• Does this apply each time the term is renewed? Note that with term life, the premium rises with each renewal to reflect the insured’s age at the time of renewal.
• Do you already know what premiums will be payable at each renewal? Are they guaranteed?
Some companies may also offer discounts on premiums because of the insured’s good physical condition and good overall health.
If you think you’re in good health, it’s important to find out whether the company offers preferred rates. You may pay less. Don’t forget to find out what criteria are used to get preferred rates, as they vary from company to company.
Insurers offer a variety of premium payment methods:
• Can the payments be made on a monthly, quarterly, semi-annual or annual basis? It’s important to compare premiums with the same frequency because one policy may be more competitive than another at one frequency, but not at a another frequency.
• Can you make your payments by preauthorized bank withdrawals, credit card, cheque, etc.?
How to compare premiums
When comparing term insurance costs, you should check for the features mentioned above.
Some are automatically included in the price or available for a surcharge. The same company may also offer different premiums depending on the sex of the insured, their health, whether they’re a smoker or a non-smoker, how risky their occupation is, etc. A set fee reflecting administration costs for your insurance policy is also usually included in your total premium.
Special features and optional benefits
• Companies sometimes offer special features. One of the most common is the accelerated benefit or living benefit, which is payment of a portion of the insurance amount when an insured is diagnosed with a serious illness and has only a certain time left to live.
• Companies may offer several optional benefits besides term life insurance.
I deserve the very best!
If you decide to take out term life insurance, make a point of dealing with a specialist at 1-877-459-2525. Given the wide range of options available, it’s worth seeking professional advice on how to best customize universal life insurance for your specific needs.