Peter C. Ciravolo
Items to consider when looking at Term Life Insurance
Are the premiums level? Many carriers still sell an increasing term premium chassis believe it or not. Although this is cheaper in the younger years, it increases 3-5% annually, and by policy year 5-6, you’ll be wishing you selected the level option.
Living benefits - many think the only time you see term insurance is in the event of a premature death. This isn’t always the case. Many of the term carriers we work with can have a blend, combination, or all of the following riders:
-Chronic (2/6 Activities of Daily Living, commonly known as a Long Term Care Rider)
-Critical - accelerates death benefit for qualify illnesses (heart attack, cancer, etc)
-Terminal - accelerates death benefit for terminal illness - 12 month life expectancy
Underwriting Process - carriers have all different underwriting processes and requirements. Many carriers now will underwrite up to $1,000,000 of death benefit between ages 18-60 with little to no medical history. There are a few other carriers that will go up to $2,000,000 and one that will even do up to $5,000,000. Another consideration during the underwriting process is whether or not it is a fully electronic and digital process. Yes, it’s 2021, but no, insurance carriers are not always the most up to date.
Paying Annual Premiums to save $ - did you know that paying annually as compared to monthly will save 3-5%? On a 20 year term, this is the equivalent of getting 1 year free!
You most likely don’t need any riders - we get this question all the time - do you need any riders on term life insurance? The only two worth considering are waiver of premium (WOP), which most of the time isn’t worth the cost, as well as Child Term Riders.
Standard or Worse health rating? The client should definitely look into a term ladder then to save on cost. The lower the death benefit and the shorter the length, the lower the premiums. So if a client comes back at Standard for $1,000,000 20 year term, to help lower costs, the client could apply for 2 $500,000 policies, one for 10 years, one for 20 years. Using a ladder set up like this will save the client anywhere from 10-30%!
Convertibility- is the contract convertible for the entire duration of the term contract? The first X years? For some policy holders, this is very important as they want the option to convert to permanent insurance down the road. You also want to make sure that the carrier offers permanent insurance, and that the products they are convertible to are competitive.
Want to see how much term life insurance is for you?