Term Life Insurance

Life insurance can be used to protect your loved ones, assets and business interests by providing your beneficiaries a tax-free benefit that can be used to settle debt, replace income, settle buy/sell agreements etc. There are many strategies in a financial plan, but protecting your estate and loved ones is a priority. The most common types of term insurance is Term 10 and Term 20, Term-to-65 and Term-to-100.

10 Year Renewable Term

This is one of the most common types of life insurance that people hold. Typically, the company quotes a rate for 10 years of coverage and then guarantees renewal without medical evidence for increased rates every ten years thereafter. Usually these plans offer conversion to permanent plans without evidence of insurability to accommodate the insured’s changing needs. This product is often used to provide relatively large amounts of coverage at reasonable rates (particularly during those first ten years). When the need for insurance is anticipated to be longer than 10 years, a 20 Year Renewable Term product might also be appropriate.

20 Year Renewable Term

This product is very similar in all aspects to the ten year term, however it renews every 20 years. Often people will use this product to insure their mortgage or other longer term liabilities. The level premium for the first 20 years can be a cost effective coverage option in a variety of situations.

Note: 10 and 20 Year Term plans typically may be converted to permanent plans between age 65 and 75 (depending on the company). Also, most term plans (with the exception of Term to 100) terminate between age 70 and 85. Term to 100 plans are typically payable to age 100, but the coverage extends until death.

Term-to-100

This is typically a level premium and level coverage plan for the duration of the policy. It is used to satisfy a permanent need for insurance, such as estate planning purposes or to provide a lump sum to offset tax liabilities upon death. In most cases, there are not any cash surrender values associated with this type of product.

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