Understanding the different types of term life insurance policies

Now, more than ever, people understand that life insurance is essential in protecting the ones they love the most and an affordable way to do this is by purchasing term life insurance. This insurance type provides whomever you choose with a one-time, tax-free payment when you die, as long as you continue to pay your premiums.

What is term life insurance and how does it work?

Deciding what term life insurance is best for you depends on your personal situation and your stage of life. Consider your age, income, debts and family structure. Think about what’s going on in your life. Do you have a mortgage or kids? Are you worried about providing for your family after you die? How much and what kind of debt are you carrying? How soon are you planning to retire? How much can you afford to spend on monthly insurance payments?

As a financial security advisor, I can help you identify your needs so you can choose:

• The amount of coverage that’s right for you
• Payment type – monthly or annually 
• Whether you need optional benefits to customize your coverage
   

Once you’re insured it’s simple. When you die, the amount of money you’re covered for goes to whomever you choose – it could be your spouse, kids, parents, a friend or a cause you’re passionate about. The money is tax-free for the person or charity of your choice.

What term life coverage might be best for you?

Reasons why a 10-year term might be right for you:

• You want a low-cost insurance policy
• You only have a few years remaining on your mortgage 
• Your kids aren’t financially independent 
• You want to lock in your insurability while you’re still young and healthy 
• You need flexibility with conversion options to extend your coverage or convert to a more permanent policy
   

Reasons why a 20-year term might be right for you:

• You want to align your coverage with the remaining amortization period of your mortgage 
• You’re already several years into your existing mortgage
• You want to provide protection for your children until they’ve finished school or are working fulltime
   

Reasons why a 30-year term might be right for you:

• You’re looking for coverage for a longer period 
• You’re having or recently had a child
• You’re buying or recently bought a house and want coverage for the duration of your mortgage
   

Reasons why a Term to age 65 might be right for you:

• You want coverage that lasts until you retired
• You want payments that stay the same throughout your working life
   

What happens when your term life insurance ends or expires?

Your policy automatically renews in most cases for the same length of time, unless you tell me otherwise. But you can change your coverage throughout your term without medical questions if your needs have changed. Your premiums may increase because you’ve gotten older or converted to a different product.

You can:

• Cancel your policy if you don’t need it anymore. 
• Let it renew automatically (in most cases for the same term; age limits apply). 
• Convert to a new longer-term policy. 
• Convert to permanent insurance coverage.
   

What are the benefits to purchasing term life insurance?

Term life insurance gives you the flexibility to extend your coverage or convert to a permanent insurance policy. You can renew or modify your existing coverage as your life changes, and since you’re already insured, you won’t have to requalify or undergo any medical testing (unless you ask for more coverage or add benefits and options).

If you think term life insurance might be a good fit for you, call me today! I’ll help you identify which product options suit your needs best. If you apply for a longer duration term product, you may be eligible for four free months of term coverage*.

*In B.C., the offer is capped at three free months.