Types of Term Life Insurance

Author: Dennis Jarvis
Source: isnare.com

Term life insurance comes in many different flavors. We feel that the more traditional Level term life is the best approach but it’s important to know what else is available and understand why level makes sense in comparison. Let’s take a look at the different types of term life on the market.

The most common type of term life is level term life. It’s pretty straight forward and this simplicity is it’s real value. This is also referred to as guaranteed renewal term. Essentially, you pay a fixed and guaranteed premium for a fixed period of time with a fixed benefit. For example, you may pay $40 monthly for 20 years for $500K of life insurance benefit in the event of your passing during that 20 year window. That’s it. Clean and simple. The term periods usually range from 5 years to 30 years in 5 year increments. This is the most common type of term life available on the market and when you run your term life insurance quote, the rates and options reflected are generally of level term. Let’s look at the other types of options which usually affect either the benefit amount or the term period.

Decreasing term life insurance takes this basic structure of level term and reduces the term life benefit amount as the policy continues forward in time. For example, the term benefit may be $500K during the first 5 years, then $250K during the next 5 years, and $100K during the last 5 years of a 15 year policy. This decreasing term would be less expensive than the $500K above since the benefit is decreasing but the added complexity doesn’t make sense. First, you’re assuming that in years 11-15, you don’t need as much protection as the first 10 years. That’s a big assumption and anyone will tell you that financial responsibilities are known to decrease with time. For example, if you have young children, college might be approaching towards the end of the term period. You’re making a bet that something would happen earlier than later and we personally feel that gambling and life insurance are bad partners. For the same amount, look at purchasing level term life for a less amount…say $300K.

What about the flip-side, Increasing term life insurance? This is just a different bet…let’s say red instead of black. The amount of benefit increases as the term period progresses. For example, it might be $100K the first 5 years, $250K the next 5 years, and $500 the final 5 years of a 15 year period. The problem is that life insurance at its core is a replacement of income over a long period of time. If you pass away during the first 5 years, you have $100K of protection to carry the family for more than 10 years! That’s a bad gamble as well. The whole point of life insurance is offset risk not bet on which risk might occur and which one might not.

There are some other variations of term life available on the market. Yearly renewable term life is an example. With this type of policy, the subscriber can renew annually for one year blocks of term life on a guaranteed issue basis. This is really just an attempt to dress term life in whole life clothing. Very similar to the wolf in sheep’s clothing, there’s a downside in the form of a much higher premium. This goes back to the whole theory of why term life insurance makes more sense than whole life as we have addressed in our whole versus term life or term life and investing articles. You will pay quite a bit more for this ability to renew annually and that money might be better put to other uses.

Term to age 65 or a fixed age (for example 70) is another hybrid between term and whole life. Essentially, it’s just a core term life benefit but there’s usually a cash value element. As discussed in the whole life versus term article, this cash value benefit can be only be won with extra premium that you pay. You’re paying a dollar to get change back. Not the best of deals unless you’re the life insurance company or selling agent.

Finally, another vehicle available is Re-entry term. With this type of life insurance policy, the life insurance rates are lower but you have to re-qualify based on health at periodic breaks such as every 5 or 10 years. This is just another gamble..gambling that you will be in good health when the re-qualification period comes up. For true peace of mind, level term life insurance still provides the best value and protection in our opinion. If whole life is over-insuring the risk, these hybrids of term life go the other way with potential risks built in by design.

Dennis Jarvis is a licensed insurance agent concentrating on term life insurance. Shop, compare, and instantly quote multiple carriers with professional guidance and resources.

Fail to Plan, Plan to Fail: Assuring Business Success with a”Life Plan”

Author: John McKee
Source: articleage.com

Norman Vincent Peale said it best: “We tend to get what we
expect”. A fresh, new year is here, and aspiring business people
should forego the ever popular New Year’s resolution to lose
weight and, instead, commit to making a “Life Plan”. Doing so
will help individuals balance their “whole life” and assure they
are ready to take on new workplace challenges as they are
presented – and to execute them well. With this in mind, here
are someinsights on the value of Life Planning:

* Passivity will get you nowhere. Far too many are not as happy
as they would like to be, as successful as they think they
should be, or as wealthy as they’d hoped they would be when they
were younger. Not coincidently, most people do not have a
personal life plan either. They simply get up each day, do
whatever it is that they get paid to do, and then do whatever it
is they think they want to do for relaxation and personal time.
In short, they let life happen to them as opposed to managing
their lives.

* Take the task seriously. However helpful, creating a life plan
requires work. Developing it can be as hard or as easy as one
makes it and requires a level of commitment to take it from
concept to completion. The more detailed your life plan, the
more readily you can identify areas of weakness and find
actionable ways to overcome them.

* Cover all the bases. A good life plan recognizes that our
lives are segmented into 3 different facets: the professional
self – the one who goes out each day to make a living; the
family self – the one who does things for and with those they
love; and the personal self who has things they love and enjoy
doing which replenish them. Addressing each of these personality
facets assures you will address, think through, and plan for all
critical areas of your life that, ultimately, intertwine.

* Keep tabs. Like insurance, you should review your life plan
after any major life event. Getting married, or divorced,
starting a family, moving, promoted, illness, any of these sorts
of things can render your life plan out of date. Since a life
plan is one of the most important tools to the achievement of
your goals, make sure it’s current. Don’t treat it as a static
document, it’s much too critical to be relegated to the bottom
drawer.

Over nearly 30 years in the business world, I have had the
privilege of spending time with many well known and well
regarded corporate executives, government officials and
diplomats. Being up close and personal with this type of
individual on a fairly frequent basis triggered the realization
that there are certain attributes most of these very successful
business people have in common. Indeed, I found that virtually
every successful individual had a personal life plan.

When asked, each could tell me in relatively certain terms what
the future was going to be like for them. Their plan wasn’t
always written down, but it was always fairly detailed and had
deadlines and clear actionable goals. In short, these
individuals had a business plan for their career ‘and’ their
life. Personal life planning can help assure business success.
Simply put, if you want something, have a plan to get it.