When clients are looking for instant coverage, want financial protection for their loved ones and are budget conscious… Term insurance is usually the go to! Term insurance is initially less expensive compared to permanent life insurance; this is because it’s not designed to last through old age which is when life insurance premiums for term are the most expensive.
What Options Do I Have with Term Insurance?
Term insurance doesn’t have to be restrictive, there are many options and features you can do to enhance your coverage.
- Guaranteed Renewable: Most term insurance includes the guaranteed renewability feature. It allows you to renew coverage without a medical exam, as long as you are below a certain age. This is a great option if your health has deteriorated, and you feel you may not be insurable. For healthy people, this option will likely be expensive, and it would make more financial sense to apply for a new, and in most cases, cheaper policy.
- Extending your Term Length: Within the first 5-7 years of owning your life insurance policy, most carriers will allow you to extend your coverage for 10+ years longer than your original term depending on your age. Your premiums will be determined by the new term however, there is no medical underwriting required.
- Converting some or all of your term amount to permanent insurance: Term life insurance policies often offer a guaranteed conversion to a permanent plan up to a certain age. There is no medical underwriting required, however, your premiums will be calculated and determined based on your new age when converting. Permanent life insurance provides two main benefits: lifelong protection and some plans can build a cash value.
What Common Riders Can I Add to Term Insurance?
Riders are additional benefits that can be added to a basic life insurance policy. They allow you to customize a policy and can provide several kinds of protection if you meet their conditions.
- Guaranteed Insurability Rider: This rider allows you to purchase additional insurance coverage in the stated period without the need for further medical examination. A guaranteed insurability rider is most beneficial when there has been a significant change in your life circumstances, such as the birth of a child, change in marital status, or an increase in your income. If your health has declined, you will be able to apply for extra coverage without the requirement to provide evidence of insurability.
- Waiver of Premium Rider: Under this rider, future premiums are waived if the insured becomes permanently disabled or loses their income as a result of injury or illness prior to a specified age. Disability of the main breadwinner can have a crippling effect on a family. In these circumstances, the rider exempts policyholders from paying the premium due on the base policy until they are ready to work again.
- Term Insurance Rider: The term insurance rider adds a layer of term insurance coverage to your policy. For example, if your base policy is a term-30, you can add a term-20 rider so that you have different coverage amounts over 20 and 30 years.
- Critical Illness Insurance Rider: The critical illness insurance rider provides a benefit if you’re diagnosed with one of the covered critical illnesses. The most common conditions are heart attack, life-threatening cancer, and stroke. Because of the severity of these illnesses, you can use the lump sum benefit to focus on recovery. It lets you take time off work without worrying about your finances.It’s important to note that the critical illness benefit is separate from the death benefit. If you receive the critical illness benefit, the payout won’t reduce your death benefit.
- Child Term Rider: This rider provides a death benefit incase a child dies before a specified age. After the child reaches maturity, the term plan can be converted into permanent insurance with coverage up to five times the original amount without the need for medical exams.
Term insurance is a great option for those that are budget conscious and that need immediate protection. You can customize your life insurance policy with additional features that can be tailored to your needs and lifestyle, term insurance should not feel restrictive.
