Term Life Insurance: The Ultimate Guide

Life insurance is a simple concept. Term Life Insurance especially. You pay the insurance company a monthly premium and in return, they promise to pay a lump sum to your beneficiary when you die. Simple.

But like most things, life insurance didn’t stay simple for long.

Term life insurance policies are now flooded with options. Your choices may include Living Benefits, Conversion options, Return of Premium, No-Exam options, plus many different riders to expand your coverage.

But don’t worry.  This Ultimate Guide to Term Life Insurance was created to help you sort through all the options and find exactly what you need:

Easy. Affordable. Term Life Insurance.

What is Term Life Insurance?

Term life insurance is life insurance that pays out a death benefit if the insured person dies during a set period of time (called the “term”) of the policy. The death benefit is paid to the beneficiary listed on the policy.

If the insured person dies after the term of the policy has expired, no death benefit is paid out.

Term lengths

The “term” of a life insurance policy is the specific period of time when the coverage is in force.

The most popular term lengths are 10, 20, and 30 years. It’s also common to find 15, 25, and even 40 year term lengths as well.

Which term length you choose should be based on your specific needs. Term life insurance is a temporary product and therefore should be used to take care of temporary needs.

Some folks choose a term length to match the remaining years of their mortgage.

Others ask for a term length that will make sure their children’s college years are paid for.

And some want to make sure their income is protected so they choose a term length that will last until their retirement benefits start.

The bottom line is that term life insurance is flexible enough to provide just the right amount of coverage for your specific situation.

What happens when the term expires?

When a term expires, the coverage is designed to end. You were covered for 10, 20, or 30 years and if you were to die during that time the death benefit would have been paid to your beneficiary.

Most buyers will simply let their policy end as it has served its purpose.

They now have much different needs that would be best protected by a different type of insurance policy.

However, there are cases where someone may want to keep their policy beyond the end of its term. An example would be someone who became sick and uninsurable near the end of their policy.

Most life insurance companies will offer to extend the term if the buyer chose to. However this extension comes with a steep price increase every year the policy is kept beyond the term expiration.

How much insurance can I get?

One of the most beneficial things about term life insurance is the amount of coverage that is available.

Common death benefit amounts are anywhere between $100,000 and $1,000,000 with policies available all the way up to $65 million. There’s even a Guinness World Record $201 million dollar policy out there.

Because the majority of large financial burdens and risks are temporary (mortgage, income replacement, etc.), term life insurance policies are the perfect way to protect against those large risks.

If you have a large life insurance need, there is likely a company out there that will have a policy for you.

Who can qualify?

Nearly all life insurance policies have some type of qualification process.  In other words, you must be approved to buy the policy.

The qualifications center around your age, health, and lifestyle.

The good news is that there are hundreds and hundreds of life insurance companies out there. Each of them with different health tiers allowing them to accept the maximum amount of risk they are comfortable with.

Chances are, you can find a policy that you can qualify for. However, if you are one of the few that don’t qualify for medical reasons, check out a Guaranteed Issue policy instead.

Do I need an exam?

Buying life insurance has traditionally meant you had to go through an exam done by a paramedical professional (paramed).  But who wants to be poked and prodded by a medical examiner?  Life insurance is one of the few things you’ll ever buy where you’ll receive physical discomfort and even pain, just for the privilege of making a purchase.

Thankfully, there is now a way to get life insurance without a medical exam.

Rather than requiring your blood and urine, these new policies will instead ask for your permission.  Permission to run your medical records, pharmacy report, and motor vehicle report.

Keep in mind that skipping the medical exam means you’re likely to have higher premiums and possibly lower coverage.

For a complete breakdown of no-exam life insurance with more Pros and Cons, take a look at our comprehensive article, Can I Get Life Insurance Without a Medical Exam?

Converting Term Life Insurance to Whole Life

We already discussed the fact that term life insurance is designed to end, as it is meant to cover a temporary need.

But what if you wanted to keep it?  No problem, just “convert” it to whole life.

Most term life insurance polices have a conversion option allowing you to convert some or all of your coverage to a permanent policy.

Some reasons you may have for converting a term life insurance are a change in need or a change in health.

If your needs have changed (such as having a large estate or a lifelong dependent), converting your term policy is a smart choice.

What may be more important to you, however, is if your health has taken a turn for the worse. What if you think you may no longer medically qualify for life insurance and you find yourself in need of permanent coverage?

No problem.  Just contact your current life insurance provider (or us as Castaline Life) and ask for help converting your policy.

Life insurance companies don’t look at your current health status when converting. That can be a huge benefit.

Of course your policy will have it’s specific rules and deadlines for converting your policy.

If you need help, just let us know.

Term Life Insurance Riders

Life insurance Riders are additional benefits that can be purchased on top of the traditional death benefit a life insurance policy offers.

Some of the most popular riders are:

Children’s Rider. Adds death benefit protection for children of the insured person. A single rider normally covers all natural born and adopted children until a certain age, like 25.

Accelerated Death Benefit Rider. One of our favorites. It allows you to access 50-95% of  your death benefit, while you are still alive, if you are diagnosed with a terminal illness. While medical treatments can help us to live longer after a terminal diagnosis, that comes with a financial burden we are rarely prepared for. Make sure your policy includes this rider.

Waiver of Premium. If you became totally disabled, it would be tough to continue making life insurance payments. This rider will waive your premiums during your total disability, allowing you to continue protecting your loved ones.

Each insurance company offers their own riders based on the product, your age, and other factors. Make sure to contact us so we can help determine which riders make sense for you.

Pros and Cons of Term Life Insurance

Is term life insurance for you or should you be looking at permanent life insurance? Take a look at these pros and cons and decide for yourself.

Term Pros:

• Lower cost
• Higher coverage
• Lots of customization options
• Convertible

Term Cons:

• Temporary coverage
• Strict medical underwriting
• Age limitations

Cost Factors

Life insurance rates are different for everyone. That’s because they’re based off your age, health, and lifestyle.

Some of the many factors that determine your term life insurance rates are:

• Age
• Sex
• Nicotine use
• Health
• Financial history
• Family history
• Criminal record
• Driving record
• Occupation
• Hobbies

Where to buy Term Life Insurance

Now that you have a firm grasp on Term Life Insurance, the next step is to find coverage.

It’s rarely a good idea to get your life insurance at work, so the best place to start is with an independent agent.

In fact, you can get started with us online Right Here.

Gone are the days when a stranger comes to your house, sits down at your kitchen table, and spreads out life expectancy charts and life insurance brochures.

Term Life Insurance can be purchased right over the phone. In fact, that’s the only way we do it. Some of our policies don’t even require a medical exam.

It’s part of our Life Guide Guarantee:

1. No home sales visits

2. No pressure

3. No obligation (even after applying)

4. Only the policy that fits you best

When you’re ready to apply, we’ll ask you some basic questions about you and your health. Then we’ll complete the application electronically. That’s all it takes to get started!

About Castaline Life Insurance

Castaline Life Insurance Agency is led by Jeff Smith, a devoted husband and father of 4.

As family providers ourselves, we understand the burden you feel to protect the ones you love.

Our Life Guides help anxious, worried, and uncertain people find peace of mind through Life Insurance.

We offer a simple 3 Step process:

1. Determine the type and amount of life insurance you need.
2. Provide instant quotes.
3. Review your quote and help you apply.

When it’s all done, you’ll feel calm, relaxed, and confident knowing you’re now a Family Protection Hero.