What To Do When Term Life Insurance Expires?

October 9, 2020 07:22 newlambertagency

When you buy a term life insurance policy, you purchase it for a set term. You pay the premium and your family gets the complete benefit in the event of your death.

But what happens when the policy expires?

Even if your term life policy is ending, you may still need some sort of insurance protection. Especially if you have house payments, have dependent children, or have major debts.

Here are some options for you to consider:

Buy another term life policy

If you’re reasonably healthy and still have some financial obligations, buying another term life insurance policy is the best option. But as you’ll be older now, you might have to pay a higher price. Though buying a shorter term such as for 5 or 10 years could help lower the cost.

There’s also the chance of getting a better life insurance rates than your former insurer, you just have to shop around. Just keep in mind that you’ll probably have to answer health questions and take a life insurance medical exam during the application process.

Take it year by year

If you’re not interested in buying a new term life insurance policy, you could opt for annual renewable term life insurance, where you decide each year whether to continue coverage or not. This is the best choice for people who have very few financial obligations.

However, the rates can jump quite a bit each year so there’s that. Alternatively, you can ask your agent if you can extend your current term policy one year at a time turning your policy into an annual renewable term life – it’s the best option for people with terminal medical conditions who need life insurance at any cost.

Convert your term policy to permanent life insurance

It is well known that term life insurance is the best choice for many people, permanent life insurance does have certain advantages. Although it costs much more than term life, permanent life insurance lasts for the rest of your life – it includes whole, universal, and variable life insurance.

Your insurance provider may offer the option to convert your term life to a permanent life insurance policy — without taking a new medical exam or answering health questions again.

Most carriers allow you to convert term life to whole life insurance, which has a fixed premium, the investment return, and death benefit. While some may allow conversion to universal life, which offers flexible premium payments and permits changes to the benefit amount. It all depends on your insurance provider.

Although there’d be a deadline for conversion and age cut off, usually 75.

Be sure to browse around or consult an agent to better understand your next step.

Understanding Level Term Life Insurance

September 23, 2020 04:00 newlambertagency

Term life insurance is the simplest form of life insurance. It is affordable and straightforward. You pay regular premiums, and if you die over the course of the term a death benefit is paid out to your loved ones. If you outlive the term, the policy expires and you stop paying.

There are different versions of term life insurance. However, people buying term life insurance are buying level term life insurance, an important distinction that guarantees you pay the same price for your policy no matter how long it’s active.

What is Level Term Life Insurance?

It is one of the most popular types of life insurance that offers you protection in the event of your demise within the term of the policy. Unlike decreasing term insurance, the amount paid as premium as well as the sum assured does not change over the course of the policy term.

That means regardless of whether you die in the 4th year or 24th year of your 30-year policy, your beneficiaries will get paid the same amount. That is why they’re also known as level benefit term life insurance.

The cost of premiums for level term life insurance varies from person to person and relies on a person’s well-being, age, and occupation. Thus you must keep up the premium payments to keep the policy coverage in place.

How do they work?

They follow the same basic process as other life insurance policies:

You chose a policy, along with a death benefit amount and term period. The cost of a term life insurance policy is determined by these, as well as the applicant’s health and age. The premiums can be paid monthly or annually.

If you or the insured person dies during the policy term, the death benefit is paid out to the named beneficiaries. If the policyholder outlives the policy, the policy expires and they don’t have to pay the premium anymore.

The terms typically last anywhere between 10 to 30 years.

Benefits of level term life insurance

Level term life insurance has its perks. When you take out a level term life insurance policy, you’ll set a term at the beginning, usually around 25 years, as well as a pay-out size. This pay-out will be the same whether you die at the beginning or end of the policy term.

Thus, it can be said that predictability is the main benefit this policy offers as you’ll know how much you’ll be leaving to your beneficiaries no matter when you die, as long as you don’t outlive your policy.

This policy also makes budgeting easy since the amount you pay for your coverage throughout the policy will remain the same. And since you’ll be paying the same amount and receiving the same coverage throughout the life of the policy, you can get 10, 20, or even more than 30 years of coverage based on your current age.

Such benefits are what make level term life insurance so popular.

Term Life or Whole Life Insurance: Which Is Right For You

June 23, 2020 12:14 newlambertagency

Life insurance can be very confusing. With all complex terms used by insurance providers, it can be very daunting for an average person to choose the best type of life insurance.

Deciding whether to purchase whole life or term life insurance is a personal decision that should be based on the financial needs of your beneficiaries as well as your financial goals.

Life insurance can be a very flexible and powerful financial vehicle that can meet multiple financial objectives, from providing financial security to building financial assets and leaving a legacy.

Read on to understand how to choose the best life insurance for you.

Let’s look at the 2 major life insurance policies:

Term life insurance

Term life insurance is “pure” life insurance. The policyholder pays premiums regularly. If they die while the policy is in effect, their beneficiary (or beneficiaries) receives a death benefit.

It’s very straightforward, which is the selling point for people who want a simple life insurance option.

The key definition when it comes to term life is the term – how long the policy is active. Term life policies expire after a set number of years, making them good policies for anyone who expects to build wealth over time and won’t need the financial safety net life insurance provides later in life.

Term life insurance is also relatively inexpensive. Because there aren’t any additional fees or maintenance, it’s much more affordable than whole life.

So if you’re looking for an optimum family life insurance, Term is the way to go.

Now let’s look at the other side of the coin.

Whole life insurance

Whole life insurance is a type of permanent life insurance, which stays in effect for as long as you pay the premiums. This means you never have to worry about uninsurability or losing your safety net as you get older.

Whole life is more complicated than term overall, but one definition you need to know is the cash value, which is an investment-like product coupled with the insurance policy.

Each month, a certain portion of your premium will go into a tax-deferred savings account or the cash value of the policy. (The exact amount that goes into savings is determined by your policy.) The policy’s cash value grows over time.

You can do many things with the cash value, including taking out a loan, drawing from it for retirement or funding the policy.

There’s also universal life insurance which is a type of permanent life insurance. With a universal life policy, the insured person is covered for the duration of their life as long as they pay premiums and fulfil any other requirements of their policy to maintain coverage. Like many permanent life policies, universal life insurance combines a savings component (called “cash value”) with lifelong protection. When you pass away, the policy’s death benefit is paid out to your beneficiaries.

If you’re looking for a straightforward policy that is affordable and can be cancelled without losing any value, then you should consider Term life insurance.

And, if you’re looking for a customised policy that doesn’t expire and works as a forced saving vehicle, then Whole life insurance is what you need to consider.