The Facts:

The “Term” in Term Life Insurance means you’re only covered for a certain period of time, usually ranging between 5 years to 30 years.Once your original term has ended and has to be “renewed” your premiums will begin to increase as your age increases either annually or every 5 years, but your benefits remain the same. Term policies can be offered as Simplified Issue or Fully-Underwritten. Simplified Issue = no medical exam, just a list of health questions.Fully-Underwritten = medical exam performed by a nurse + health questions and family history.

Pros:

Term Life insurance offers the greatest value of any life insurance policy that covers an illness-related death (sickness or natural causes). For this reason, term policies are best used for younger adults who are still working and need an affordable way to protect their dependents and/or assets such as a mortgage, car, loss of income etc. Riders can be attached to this term policies to customize your coverage to your liking, like putting toppings on top of your favorite flavor of ice cream. Return of Premium rider allows you to receive a rebate for all of your premiums paid in once your term has ended (usually only available for 30-year term). Waiver of Premium rider will allow you to keep your coverage without paying any premiums should you become disabled and unable to work.Disability Income rider will pay you a designated monthly income should you become completely disabled and unable to work.

Cons:

The national average payout on term policies is .9%. Meaning for every 100 term policies an insurance company has, they will only pay out to 1 family on average.The two main reasons a policy does NOT pay out areThe insured outlives their term (lives beyond the end date of their policy)The insured cancels the policy when premium increases exceed their budget.There are no cash values or dividends associated with term policies, so like cheese and milk you either “use it or lose it,” and there’s no refund once it spoils.

Recommendations:

Best suited for Ages 18-55; depending on Needs Analysis. Term policies are best for mortgage/loan protection. Term policies are not recommended for anyone who is retired or on a fixed income, as premiums will increase over time and coverage will expire. If Term life insurance is not what you need, read more on Whole Life or Universal Life plans.