Term Life Insurance: Insurance for Income Protection
Term Life Insurance is a contract between the insurance carrier and you, the policy owner, that states that they will pay a death benefit to the insured’s beneficiary in exchange for a premium payment – during a specified time frame, hence the word Term.
The policy is for a predetermined period of time, which is generally, 10, 15, 20, 25 or 30 years.
If the policy owner does not pass away during that term timeframe, the policy would expire and there would no longer be a death benefit offered.
Facts about your policy’s value:
The premium, or amount you pay, varies based on your age and the benefit amount, and the length of the term. However, there are elements you need to know as it pertains to your policy’s value:
There is no cash value that accumulates with these policies. Meaning, it’s not an asset or an investment vehicle. The only monetary value received will be to your beneficiary upon your death during the term – that’s it.
You can just stop paying the premium to cancel the policy. For example, if you get a 20-year term policy and stop paying after 2 years, the policy lapses and the premiums you already paid in for the 2 years belongs to the carrier.
The premiums that are paid in over the course of the term are not returned, with only a few exceptions being specific programs offered with select carriers (like some Mortgage Protection products).
What people often don’t realize is that term life products often have a guarantee period and may differ from the term itself.
Let’s start by clarifying what is a guarantee period?
It’s the length of time in which the premiums you secured are locked in and will not change. Therefore, it’s important to recognize that you may have a 30-year term insurance policy with a 20-year guarantee period. This means that your premium payments are guaranteed to never increase for the 20-year guarantee period. However, if you want to continue the term for the full length of the 30 years, when you get to year 21, the premiums escalate until they expire at year 30.
Why is Term Life Insurance important and who needs it?
Term, or temporary, insurance provides individuals (and families) with income protection during primary earning years. The ideal Term Life candidates are those who have:
A mortgage
Multiple properties
Young children
Financial responsibilities
A business
Vulnerable assets to protect
The pros of Term life insurance is that you can secure very affordable premiums for high payouts when you’re young. However, the downfall is that Term policies have an expiration date and do not offer the long-term guarantees for life payout, like permanent and Whole Life Insurance products offer.
How can you ensure that you’re not risking your premiums increasing as your guaranteed period comes to an end? Get your policy reviewed by a reputable and honest agent. Reach out to one of our agents at 561-412-5500.
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About Pivotal Life Insurance
Pivotal Life Insurance is a family owned, independent insurance agency that focuses on income protection and family security through Life Insurance products (Term Life, Whole Life, Final Expense), Mortgage Protection and Annuities. With a range of product offerings, we accommodate the varying needs of our clients through resources provided by the nation’s top rated carriers. Although we are headquartered in South Florida with a branch in Maryland, we service most of the United States as our agents are licensed throughout the country. Pivotal Life Insurance is one of the fastest-growing agencies and we pride ourselves in putting you, our customers, first.
Insurance Is Pivotal. Cherish what’s important.
For more information or if you’d like to join the Pivotal family, visit www.insuranceispivotal.com or call at 561-412-5500.