TERM LIFE INSURANCE QUOTE AND EXPERT TIPS

Sample Term Life Insurance Quotes

Numeorus factors such as e.g. your health and fitness condition, your habits, your family history, etc. allow insurance companies to determine what rate you can qualify for. STANDARD RATES are the rates that 80% of people end up paying. PREFERRED RATES are lower rates and about 20% of people qualify for them. PREFERRED PLUS RATES are the best rates and about 10% of people qualify for them.

Term Life Insurance: Expert explains

Lorne Marr from LSM Insurance shares his experience:

“Term insurance policies come in a variety of forms. Generally, term insurance policies start off lower in premium and go up in costs as you get older. For example, a 10-year Term policy starts off with a very low initial cost and then raises at the end of the 10 years whereas a 20-year-term policy – the premiums will start off a little bit higher and then they would go up at the end of 20 years. That differs from permanent policies that would start off higher in costs but never go up in costs as you get older.

Now when looking for a term insurance policy you gonna wanna work with an independent broker who can find you the best possible premium and match up the length of the term with your specific term insurance needs.”

What is Term Life Insurance?

A term life insurance policy covers a policyholder for a pre-defined period of time, such as 10 or 20 years (Term 10, Term 20).

It is a simple, pure insurance product without a cash accumulation or savings component.

Term insurance works in the most straight-forward way: if the policyholder dies during the term, their beneficiaries get the coverage amount.

When do you Need Term Life insurance?

Term life insurance covers a policyholder for a limited period of time (with the exception of Term 100, which is actually a form of permanent insurance). Term insurance is optimal when:

1. You want protection for a pre-defined period of time to protect yourself and your family (e.g. paying off a mortgage).
2. You want to make sure your kids are being taken care of until they are able to live on their own.
3. You want to minimize your life insurance premiums (thought it is important to know that these will significantly increase when you renew your policy).
4. You need pure life insurance coverage because you invest elsewhere and you are not interested in leveraging the value accumulation component of permanent life insurance.

How Does Term Life Insurance Compare to Other Life Insurance Products?

Here is a brief comparison of how term life insurance compares to whole life insurance and universal life insurance.

What are Term Life Insurance Rates?

Term premiums are typically lower than universal life or whole life insurance premiums. Your term life insurance premiums stay the same for the entire term of the policy (e.g. for 10 years if you purchased a Term 10 policy) but will increase once your policy expires and you get a new one.

That is different from whole life insurance premiums, which will be higher at the beginning but will stay the same over the course of your life.

Term Life Insurance: Important to know

1. The premiums are fixed for a stated term
Most policies have guaranteed rates for the initial term, but a few allow the insurance company to adjust the premiums during the policy term.

2. Term rates can vary sharply from one company to another
Term life insurance rates can often vary from as much as 50% to 60% from one company to another.

3. Need to reapply
If the insured is still in good health at renewal and still needs coverage, he/she should look at reapplying for a new term policy. Term policies build in a buffer that accounts for the insured’s possible health changes during the years of the policy and if the insured is still in good health, he or she could qualify for a much lower rate on a new policy. One caveat though, make sure the insured qualifies for new coverage before cancelling an existing plan.

4. Rate increases
Term policies have very significant increases at the policy renewal. For example, Term 10 policies often increase 300% to 400% and Term 20 policies can increase up to 1000% at renewal.

5. Most term life policies are renewable and convertible
The renewable feature on a term policy allows the insured to renew without a medical, but the insurance company does have a built-in buffer in the premium allowing that the insured’s health may have changed during the policy term. The convertibility feature allows the insured to convert from a term policy to a permanent plan without a medical. The conversion option on most Term policies expires at age 65.

6. Term life policies have a 2-year suicide and contestability clause
Similar to permanent policies, term life plans do have a 2-year contestability period, which allows the insurance company to contest a claim in the first two policy years in the event of fraud. The insurance company will also forfeit a claim if the insured commits suicide within the first two policy years.

7. Term 10 policies are often less expensive than Term 5 policies
Term 10 policies offer premiums fixed for a 10-year period and are often less expensive than term 5 policies, which offer premiums that are level for 5 years. This is due to the fact that very few life insurance companies in Canada now offer Term 5 policies and thus, the premiums tend to be less competitive.

8. Additional benefits
Most term policies allow the insured to add a full range of riders, including a a disability waiver, an accidental-death benefit or children’s term rider.

9. Preferred rates on Term Policies
Many life insurance companies offer Preferred Rates on their term policies. Preferred Rates are given on term policies to insured and with very good family health history.

Top 5 Term Life Insurance Mistakes People Make

1. Waiting Too Long To Get Covered
Sometimes it’s difficult to know when you should get life insurance. If you are planning to start a family in the near future, it would be a wise idea to start looking for good life insurance coverage as soon as you can. The future is unpredictable, and this may sound a little pessimistic, but anything can happen to you.
It’s not wise to assume that your health will stay the same for the next ten or forty years. Health is unpredictable, especially in today’s environment, where there are many factors that may influence your health.
So, before any of that occurs, it’s best to get covered when you are young and healthy.

2. Buying Too Little
It’s important that you purchase enough coverage. It’s easy to make the mistake of purchasing too little because you want a smaller premium. However, what you should really be doing is thinking about the support your family will need if they rely solely on your income.

There are plenty of variables to consider when shopping for term life insurance. Coverage amounts of $250,000 or $1 million can sound like fortunes, but some people discover too late that the amount of money they purchased doesn’t cover everything they had intended. It’s important to figure out your current expenses and do your best to accurately assess future costs.

3. Not Reviewing Your Policy
It’s important to review your policy on an ongoing basis. Some of people think it ends with you purchasing the coverage. In fact, it does not. Evaluating life insurance needs is an activity that must be conducted on an ongoing basis. A life insurance needs analysis should be conducted at least every 2-to-3 years because circumstances change (marriage, divorce, or birth) and the amount of insurance may no longer be adequate.

It’s not mandatory that you stay with your current company. You can most definitely go for another one.

4. Not Buying A Lengthy Term
Here’s another mistake. People tend to buy term insurance that might be too short sometimes. Review what you intend on doing in the future and whether or not you want to be covered for a specific period of time.

It’s better to purchase a policy that you’ve done research on rather than just jumping in blindly with the wrong amount and length of coverage.

If the purpose for the insurance is to provide coverage for a specific period of time in your life, such as until the children finish college, and your youngest child is 5, then your policy should allow you to maintain the coverage at a guaranteed rate for 20 years.

5. Relying On Your Employer Coverage
More than likely, the coverage that your employer is giving you isn’t enough. Besides not giving you enough coverage, it doesn’t also provide the security you need for the future. You usually do not have a say in the type of coverage the policy offers. It’s given to you via your employer and can be seen as a plus. But this plus isn’t enough to give that financial security to you or your family.

Therefore, it’s best to have a personal insurance coverage for you just to be on the safe side. Again, it will give you a sense of security and will allow you to relax and not worry so much about whether or not you have enough coverage from your employer.