Term life insurance offers a secondary form of protection for individuals who are willing to take on some additional risk with their finances. Instead of purchasing long-term coverage that would cost an arm and a leg over the course of decades, you can put money aside regularly with the intent to purchase long-term coverage at a later date when rates drop or when your current policy expires.
What is Term Life Insurance?
Term life insurance is exactly what it sounds like; it is a form of insurance that is set to expire at a specific point in time. This can range anywhere from a few years to a few months, depending on the company that you purchase your policy from. One of the major advantages of purchasing a term policy is that you are able to pull out money for a long-term investment.
If rates on long-term investments are low at the time you purchase a term policy, then you can save up money for a later date when rates are higher. This can be a great way to protect your family from a low-paying job that won’t be around for decades. If you have enough money saved up in cash to pay off your mortgage or pay off your car with monthly payments, then you can also use this as part of your term plan.
If you have a term policy that is only set to last five years, but you can afford to put 15% of your monthly income towards it, then you can pay off your house or car that much sooner. Another reason to consider purchasing term life insurance is because the amount you have to spend each month will be significantly less than if you were to purchase a long-term policy.
Guaranteed Issue Life Insurance
This is a type of term life insurance that has a guaranteed issue and renewal clause. Many providers will offer this type of insurance in order to get you to sign up. Basically, guaranteed issue means that you will not get a policy from the insurance company unless you take it out. This is a great clause for many reasons.
First, if you are not happy with your policy, you can simply wait until the next time you take a policy out and cancel it. You won’t have to pay a penalty that would be applied to an earlier term policy.
Second, if rates on long-term investments are low when you are planning on taking out a new policy, then you can wait until rates are higher. This can save you a lot of money in the long run.
Buy Life Insurance Online No Medical Exam
If you are interested in purchasing term life insurance, but you are too busy to visit a life insurance agent in person, then you can buy term life insurance online. This can be a great option for people who want to purchase life insurance, but do not have time to visit an insurance agent.
Many life insurance companies offer online term insurance quotes and comparison shopping tools that allow you to compare multiple quotes from different companies. Once you choose a company, you can then purchase online, with no medical exam needed. This can be a great option for people who are too busy to visit an insurance agent, or who do not have a health condition that would make it necessary for you to take a medical exam.
Instant Life Insurance Coverage
If you are looking for a way to minimize your risk and purchase term life insurance, but you are too busy to look into long-term options, then you can opt for an instant coverage option. What this means is that instead of committing to a specific amount of coverage, you can simply choose a level of coverage that is suitable for your income and assets.
You will then have the option to add coverage as you get older, but you will not have to pay for it until it is needed. You will be able to purchase term life insurance with a quick, easy online process. This can be a great option for anyone who is busy, but does not want to take on the burden of a long-term commitment.
How Does Term Life Insurance Work?
With any type of insurance, it is crucial to understand the specifics of what you are buying and how it works. If you don’t, then you may end up regretting your purchase. When it comes to term life insurance, the most important part of the deal is the premium. This is the cost of your insurance, so it is important that you can afford it. The amount that you pay each month is what covers the insurance company in case you die.
At the end of the term, you will be able to withdraw your premiums and buy another type of policy if you want. The second most important part of the deal is the term. There are many different term lengths, so it is crucial that you choose one that is right for your financial situation.
Types of Term Life Insurance
Our next section will provide a brief overview of each type of term life insurance available to you.
- Standard Single Premium Term – This type of policy has a single premium of $500 to $2,000 that is paid for the full term of 20 to 80 years. It is a good option for those who can afford it, as it provides an amount that is very unlikely to be depleted by any of your expenses.
- Single Variable Premium Term – Single variable premium term life insurance is a type of term policy that has a single premium that is set at a set level, but the amount may increase each year. This type of policy may be the best choice if you want some protection, but not a lot of it.
- Variable Geometric Premium Term – This type of term life insurance is like a variable single premium term with a twist. It has a single premium that is set at a set amount, but the amount is based on the age of the person purchasing the insurance.
How to Choose the Right Term Policy
Now that you understand the basics behind term life insurance, it is time to take a closer look at the specific factors you will want to keep in mind when choosing your policy. These are the most important aspects of term life insurance that you will want to keep in mind when making your decision.
- Coverage Amount – This is the most important thing to consider when choosing the right coverage amount for your term policy. If you are only looking to protect yourself from a single event, such as the sudden loss of a job, then you may only need a small amount of coverage. However, if you are looking to protect yourself and your family from the possibility of an unexpected expense, then you will want to go for a larger policy.
- Term Length – Another important factor to consider is the length of time that you choose for your term policy. Longer term policies may not be as expensive, but they have a higher chance of paying out before they expire. If you are looking to protect yourself against the unexpected, then you will want to go with a longer term policy. Finally, consider whether you want a term policy that has a guaranteed issue clause or whether you want one that is issued on a first-come, first-served basis.
Is Term Life Insurance right for you?
Now that you have a better understanding of the different types of term life insurance available to you, it is time to examine whether or not term life insurance is right for you. Term life insurance can be a great option for anyone who does not have enough money to purchase a long-term policy, such as someone who just got a new job and has not saved up enough money for a long-term investment.
It can also be a great option for anyone who is too busy to take on a long-term commitment, such as a single parent who does not have the time to save enough money for a long-term policy.
4 Best Instant Life Insurance Companies.
Erie’s policy is one of the most flexible on the market. If you qualify, the coverage can go into effect the same day you apply. Otherwise, you may need to take a medical exam. You can buy small amounts of coverage, starting at $10,000, and a term as brief as five years. An accelerated death benefit rider is automatically included.
Instant life policy: ERIExpress Life.
Eligibility age range: 18 to 55.
Coverage amount: $10,000 to $500,000.
Availability: All states except NY.
Term lengths: 5, 10, 15, 20 or 30 years.
If you need a lot of life insurance ASAP, Brighthouse’s SimplySelect might be a good fit. The policy features an accelerated death benefit rider and can be converted to a permanent policy later on. It’s also renewable up to age 95, which means you can keep the policy after the initial term expires without going through the life insurance application process again, though your premiums will rise.
Instant life policy: Brighthouse SimplySelect.
Eligibility age range: 25 to 50.
Coverage amount: $100,000 to $2 million.
Availability: All states except CA, IL, LA, ME and NY.
Term lengths: 10, 20 or 30 years.
Lincoln Financial allows you to apply for a no-exam policy online or over the phone. You can upgrade to permanent coverage before your term policy expires or you reach your 70th birthday — whichever comes first.
The policy is guaranteed renewable up to age 95.
Instant life policy: Lincoln TermAccel.
Eligibility age range: 18 to 60.
Coverage amount: $100,000 to $1 million.
Availability: All states except NY.
Term lengths: 10, 15, 20 or 30 years.
Haven Life offers two types of instant life insurance policies (Haven Simple and Haven Term). The applications for both policies are fully online. If you’re approved, your coverage could be issued within minutes. Haven Simple doesn’t require a medical exam, while some applicants may be asked to take a medical exam to qualify for Haven Term. The policies include two life insurance riders at no extra charge. The accelerated death benefit rider allows you to access a portion of your death benefit if you’re diagnosed with a terminal illness, while the accidental death benefit rider pays out an additional lump sum if you die in an accident.
You can increase your coverage in the first 90 days if you decide you need more life insurance, and decrease it at any time.
Instant life policies: Haven Simple, Haven Term.
Eligibility age range: 20 to 55 for Haven Simple; 20 to 64 for Haven Term.
Coverage amount: $25,000 to $500,000 for Haven Simple; $250,000 to $3 million for Haven Term.
Availability: All states except CA, DE, SD, ND and NY for Haven Simple; nationwide for Haven Term.
Term lengths: 5, 10, 15 or 20 years for Haven Simple; 10, 15, 20, 25 or 30 years for Haven Term.