Term Life Insurance Comparisons

Term Life Insurance comparisons should focus on more than just rates and quotes. It is important to select the right type of coverage, find a plan with the right features, and pick between a variety of policy options to best meet your needs.

A growing family should compare four term life insurance components:

• Comparison to permanent coverage: whole life, universal life, etc.
• Features: term periods, renewability, convertibility, accelerated death benefit
• Riders: waiver of premium, accidental death, spousal coverage, dependent children coverage
• Quotes: compare premium rates
  
  

You should also compare term life insurance to permanent cash value policies: whole life, universal life, etc.

Term life insurance offers the highest death benefit for the lowest cost when compared to other types of life insurance. Premiums are level for the specified time period, it pays the death benefit if the insured dies within the designated time period, and there is no cash accumulation.

Term life insurance addresses the "IF" in life. Term life insurance makes the most sense when the need for coverage will disappear at some point, such as once college expenses have been put to rest. It addresses the question of: "what if I die before paying for the kids’ education?", or "what if I die with no assets for my spouse to draw upon?"

Permanent coverage is designed for the "WHEN" in life: when the kids finish paying for college, when I retire, and when I die.  Cash value policies are designed to be in place when these events occur.

It is also important to compare term life insurance features built into the base policy: term flexibility, renewability, convertibility to cash value plans, and accelerated death benefits.

Term life insurance provides a guaranteed level premium for a specified term: 5, 10, 20, and 30 year terms are quite common.  It is important to understand what happens when your term expires, and how this relates to your temporary needs.    Longer terms will have higher initial premiums, but may prove most cost effective over time if your temporary needs will last longer.

You need to understand what happens when your term expires.  Will you be able to continue coverage without evidence of insurability?   What will your rates look like compared to today’s rates?   We often underestimate how longer our temporary needs my last.  As a term nears its end, many couples find themselves wishing they had selected a longer term because their health has changed. 

Many term policies give you the option of converting to a cash value plan either at specified intervals, or at any time during the contract – often without evidence of insurability.  You can start with smaller premiums, and then extend the life of the policy if needed.

An accelerated death benefit allows you to use a portion of your death benefit if you are diagnosed with a terminal illness.

Compare term life insurance riders as your second to last step.  Some common term life insurance rider options include spouse and dependent coverage, waive of premium benefit, and accidental death benefits.

Term life insurance spouse and dependent coverage riders allow you to add other family members into a single policy.  Compare the rates of adding these other family members as riders as opposed to applying for individual plans.  Sometimes the rates, convenience, and simplicity of a single policy make the most sense.

A waiver of premium rider waives all premiums in the event that you become totally disabled.  Many people get sick, lose their income, and drop their life insurance coverage to cut costs.  Once returning to work, they may no longer qualify for coverage.  This rider addresses this concern.

Accidental death benefit rider provides an additional death benefit if the insured dies as a result of an accident.