Best Types Of Term Life Insurance Policies

Insurance, in general, is confusing, and life insurance can be very confusing to understand due to all the provisions and riders. So when carriers come out with multiple products with an array of regulations, it can be overwhelming to decide which is best for your planning needs.

Type of Life Insurance

So let’s catch you up on the different types of term life insurance policies. Being informed will help you be more comfortable with the product and more confident in your decision to purchase the plan for you or your family.For the most part there are four major product lines of term life insurance plans available:“ART” or Annual Renewable Term Life: Or it is also called “Yearly Renewable Term” or YRT and ART or “Annually Renewable Term” This product simply provides protection for one year, then it renews the next year same face amount, but the premiums increase with your attained age.This life insurance policy is typically used in planning for very short term needs. Perhaps to cover a loan or some business situation where an executive or key employee needs the coverage.

Level Term Life: This product has a level death benefit that you choose at the time of application.The premium is level as well, but you need to be very careful here. Depending on the carrier some policies may be a 20 yr level term life, but the premiums may adjust after an initial ten yr guaranteed period. Most carriers have guaranteed their Level Term Life Products for the whole period, they have done this primarily due to competition. Make sure you look at the carriers illustration ran on their software. There you will be able to verify if the premiums are guaranteed for the whole term period.

Mortgage Term or Decreasing Term Life Insurance

Due to widespread mortality and better carrier cost controls this product is not sold much, level term plans are just as affordable and more efficient. You may have heard this product called Mortgage Term Life Insurance also because it was marketed mostly to new homeowners after buying a home to cover the loss of the breadwinner. This product would simply decrease the face amount and premiums over the years of keeping the policy in force. The goal would be that when your mortgage or loan was paid off your insurance would dissipate as well because there was no longer a need for coverage.In our view, you should buy a level guaranteed plan.Currently, the rates are lower than ever, and you will want a larger face amount most likely anyway if you qualify.

Return Of Premium Term Life Insurance

Return Of Premium Term Life: This Type of Life Insurance Policy is a newer product that has been around for a few years now. I like this product, and it has become very popular for the following reasons. Typically depending on the carrier, you could purchase a 15 year, 20 years, 25 years or 30-year policy. What happens is after you hold the system typically for half of the time of your guarantee you would start building a return of your premium dollars.

How it works is if you buy a 30yr top plan, and if you still own it after 15 years there would be a percentage of your premiums paid into the policy that you could walk away with. Request that your broker or agent show you the carriers illustration where it shows you exactly how long you have to hold the policy and how much you would get back in your pocket.Of course, if you hold the policy to maturity you will get back 100% of your premium, not too bad heh. Only bad about these policies is that they are more expensive that straight Term Life policies. The return of premium life plans is great if you can justify paying more now for the potential to get all your premium back down the road.

Biphoo

9 Aug 2016

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