Most people buy life insurance in the long run because they think they have a need to protect their family if they die. People usually opt for term insurance if they have a limited budget or if they feel the need to provide their loved ones with a large cash infusion at their death to be a finite need.
When discussing life insurance, there is a debate in the world of experts in personal finance and in the life insurance world in general regarding the pros and cons of life insurance. Some suggest that it is always the best type of life insurance because a person who buys it should also save money elsewhere: bank accounts, brokerage accounts, pension accounts while paying their maturity premium.
The idea is that by the time your semester insurance expires or reaches its affordable life (more on that, keep reading) you will have enough money to "self-insure". It's an idea that works on paper and if you're the type of person who has an extremely stable, eventful and predictable life, it can definitely work for you.
What is the best term life insurance?
That's a really good question and I have a nice answer that probably will not satisfy everyone but …
The best life insurance policy is the one you own and which applies when you die. This means that when you die you are still within the term period, your premium payments are current and the life insurance company pays your beneficiary the death benefits you paid for during the period period.
Now, not all term insurance products are the same, but as the world exists today, in October 2020, your best all-round choices are tiered insurance. The most common options here are 10-year level, 20-year level and 30-year level.
Which one you choose depends largely on your age and your budget. In addition, there are 15 and 25 year old insurances offered by some life insurance companies but 10,20 and 30 years are what are most often offered and bought in my experience.
The insurance that works best for you depends on a variety of factors, including your age, health and what additional features you may want as part of your policy. Some offer benefits of chronic illness, benefits of critical illness, multipliers with unintentional death distribution and even premium repayment.
What if you want to convert your futures policy for life? when discussing an insurance purchase with my clients is to ask if they plan to ever want to convert the concept of insurance to life or any other form of permanent life insurance that has a cash value.
If it's part of their long schedule, I want to make sure they buy a futures policy from a company that has a variety of options that are worth converting to. Hope it makes sense to anyone reading this? If not, please contact us, we will be happy to help you, just send a message from our contact page .
What happens if I survive my term life insurance?
This is a really good question and one that everyone should definitely consider a real possibility. Statistics indicate that slightly less than 2% of term insurance policies ever pay a death claim.
Now it is not because all claims are denied. I know some probably thought so. No, the reality is that most people stop paying their premiums or that they survive the term insurance coverage. It really should come as no surprise that this is the case. If you look at the premiums you pay for a futures insurance and think about it logically, you will calculate that the probability that the life insurance company will actually have to pay a claim for damages is quite low.
In most cases, if you are still living at the end of a 20-year insurance policy (for example), you have three options:
1. Let the policy expire. The insurance company is happy to let you go. Remember that they have been collecting premiums for 20 years and now the company is completely ready for the death benefit.
2. If the company allows conversion (to whole life or universal life) you can drive it. And remember, in most cases, you can convert part of the death benefit into one of their permanent insurance policies. Example: you have a term policy with a death benefit of $ 500,000, you are nearing the end of your term of office and want a full life policy but you have a very limited budget. You can convert $ 100,000 into an entire life policy and let the other $ 400,000 end.
3. You can continue the coverage. Yes, even if the term expires, you can keep the coverage but it will cost you. A lot in most cases. To get a better idea of it, take a look here where you can see a policy illustration that clearly shows the dramatic cost increase to keep the policy if you want.
Do you get your money back at the end of the life insurance?
For most term insurance, the answer is "no", you will not get your money back at the end of the term (10,20,30 years). However, there is an exception to this rule.
If you buy a life insurance policy that has a premium repayment function, you will actually get all your premiums that you clean during the period reimbursed to you. In general, the return on premium insurance is a bit more expensive than traditional level policy, but they exist and are very popular for some markets.
How these insurances work. Imagine that your name is Bob and that you are 44 years old, in decent health, and that you do not smoke or use tobacco. For a 30-year premium repayment period with a $ 200,000 death benefit, you pay $ 66 / month. At the end of 30 years you are still alive, that's good. The insurance will return $ 23,760, which is equivalent to all premiums you paid into the insurance during the 30-year period. Not a bad deal if you do not intend to ever convert your insurance and you could always use the cash to pay the mortgage on your house at the end of the period.
Should I convert my term life insurance to permanent?  This is a question that has no really simple answer. If you have a permanent need that you want to cover, yes, you should convert your lifetime policy into something permanent (whole life or universal life).
Many times people buy a 20-year or 30-year policy without the intention of converting it. They are convinced that the need for life insurance in their lives has an end date. But life has a way of taking turns that we do not always expect.
In these cases, it can change the family dynamics – someone who marries at a later age and has a second set of younger children – this is quite common. Or even more commonly, you are developing some form of medical condition that would prevent you from purchasing another insurance policy. In that case, it may be the best option to convert some or all of your term insurance.
There are also people who buy a level insurance in order to convert the latter when their budget allows.
Dying is not a good thing
Hopefully we can all agree that it is not a good thing not to die. Remember that if you have life insurance and you do not die, the insurance ends at the end of the period. The notable exceptions are that you specifically purchased a premium policy refund or that you are willing to pay the greatly increased premiums at the end of the level to keep the insurance in place.