eFinancial: 5 things to know about term life insurance
CHICAGO, April 08, 2022 (GLOBE NEWSWIRE) — Term life insurance provides financial protection for loved ones at an affordable price. If the insured dies while the policy is active, beneficiaries will receive a substantial death benefit that they can use to replace income, cover end-of-life costs and pay off debts.
These policies are generally simpler than permanent life insurance, but there are still a few things customers need to know to be more informed when researching. term life insurance quote. Let’s dive deeper into five things to know about term life insurance so potential policyholders can feel more confident when shopping around and comparing term life insurance policies.
1. Several factors affect policy costs
Many factors can affect the cost of a term life insurance policy, including:
- Age: Older policyholders pay higher premiums than younger policyholders.
- Health: Health issues or a family history of health issues may result in higher premiums.
- Gender: Men tend to pay slightly higher premiums than women.
- Smoking: Smokers pay higher premiums.
- Job: Some jobs, such as airline pilots or firefighters, are considered risky. Insured persons may pay more if they work in one of these high-risk jobs.
- Hobby: Some hobbies are considered high risk, such as skydiving and auto racing. If an insured participates in any of these activities, their premiums may be higher.
- Insurer: Some insurers may charge different premiums than others for the same amount of coverage.
2. Policyholders can add endorsements
Riders are add-ons that policyholders can pay for to include additional coverage or other benefits in their term life insurance policy. A popular rider is the accelerated death benefit rider. This allows the policyholder to potentially receive a portion of the death benefit sooner if diagnosed with a chronic or terminal illness. With this rider, policyholders can use the death benefit to cover the costs associated with a major medical condition.
3. The policyholder may be required to undergo a medical examination
Most term life insurance policies require policyholders to complete a medical questionnaire and undergo a medical examination. The policyholder will usually take it after taking out the policy. Once an insured submits their claim, the insurer will provide them with instructions on scheduling the medical examination.
Medical examinations provide insurance companies with accurate health information that can help them assess the eligibility of the insured and calculate the amount of premiums they will have to pay. Policyholders with health problems or a family history of health problems may have to pay higher premiums.
4. There are several types of term life insurance
There are several types of term life insurance, and comparing these policies can help policyholders choose one that fits their coverage needs and budget:
- Fixed term life insurance policies: Level term life insurance provides a death benefit for a fixed term.
- Renewable term life insurance policies: These policies allow policyholders to renew their coverage without a medical exam, meaning they cannot be declined for the new policy. But keep in mind that the new policy will charge higher premiums.
- Convertible term life insurance policies: These types of life insurance policies allow policyholders to convert part or all of their term life insurance coverage to a permanent life insurance policy without passing a medical exam, helping them to avoid denial. But once they convert to the new policy, the premiums will increase.
5. There are many term lengths available
Term life insurance typically offers terms of 10 to 30 years. This makes it easier to get the right coverage and stay on budget. For example, if an insured has a new child and wants to supplement their current policy until the child becomes an independent adult, they could purchase a 20 or 25 year policy to increase coverage at an affordable rate. Then, when the child grows up and the contract expires, the insured will no longer have to worry about paying the additional premium.
The bottom line
Term life insurance policies can provide great financial protection, but it’s essential to know how they work so policyholders can get the coverage they need without paying too much. Several types and durations are available, and policyholders can add riders if they want more features, but these are not the only factors that affect premiums. Age, gender, health, occupation and medical exam results can also influence a policy’s rate.
Researching and shopping around is one of the most important things life insurance customers can do in addition to understanding how these policies work. By gathering multiple quotes, policyholders can find a great policy with affordable coverage.
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