Term Life Insurance Questions to Get Answered Before Buying Your Term Life Insurance Policy
Purchasing the right term life insurance coverage may seem
life a straightforward transaction to many people. However, in many cases, if
you fail to ask the right questions about your insurance, you may end up with
the wrong type of life insurance policy.
While everyone’s situation is different, the following are some general questions that you may want to have answered when shopping for your term life coverage.
What is the Premium?
Obviously, you need to find out how much your life insurance will cost, to make sure you can afford to buy the amount of term life insurance coverage you need.
You’ll also want to make sure that you know the frequency of which you need to make your premium payments. The basic premium payment options are usually monthly, quarterly, semi-annually and annually.
One thing about some term life policy premiums that you need to know is that it may increase at certain intervals, for example, every 5 years there may be an increase in the amount of premiums you pay for your term life policy.
Make sure you understand how long your premium is guaranteed to remain level (the same) before purchasing your term life plan. Level term life insurance policies offer level premiums for a term of 10, 15, 20 or 30 years.
How Long Can You Keep The Term Policy?
By definition a term life insurance policy is supposed to provide temporary coverage for a specific period of time.
However, some people may need coverage longer than the term they purchase. You may or may not be able to automatically renew or extend your life insurance coverage beyond the original term (duration) of your life insurance policy.
Make sure your life insurance policy’s rules specifically provide for automatic renewal of your life insurance without requiring a medical exam, before you sign up for your term life plan.
Also, remember that even in those instances where you are able to continue your life insurance coverage beyond your original time frame, there is usually a certain point in time that you are no longer able to keep your coverage, even if you wanted to.
For example, if your term life insurance expires in 20 years when you are 85 years old, you probably won’t be able to renew your term life policy for another term when you reach age 85.
Can You Convert from Term Life to a Permanent Life Insurance Policy?
Another very important question that you may want to ask when shopping for a term life insurance policy is whether you can later convert your coverage into a permanent insurance policy, if your life insurance needs change later on.
If you would like to have permanent life insurance but cannot currently afford the amount of coverage you need, this may be an option in the future – converting your term life policy into a permanent policy.
However, make sure the conditions regarding conversion specifically guarantee that you would not have to take another health examination at the time that you request your policy conversion of life insurance from term life to permanent life insurance.
Also, you’ll want to find out the time frame within which the conversion privilege will be valid as in some cases it may run out before your term life insurance coverage expires.
There should be a specific date stated in your term policy that indicates by which time you need to convert your term life policy into a permanent life insurance plan, if you want to.
Will Your Life Insurance Needs Change?
One of the most frequent mistakes that people make is failing to consider the probability of their life’s circumstances changing, which may require they maintain life insurance protection for an extended period of time beyond their current needs.
While basic term life insurance can be easy to secure and relatively affordable, you should consider a life insurance policy that will allow you to extend coverage without any additional medical underwriting in the future, even though you will likely end up paying a higher premium.
At the end of the day, however, you should choose the life insurance policy that most appropriately meets your needs and fits your budget.