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Term Life Insurance
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Term Life Insurance
Alright, let's talk about term insurance! It's a type of life insurance that's pretty straightforward and easy to understand.
When you buy term insurance, you pay a premium every month or year, and in exchange, you get coverage for a specific period of time, called the "term". If something were to happen to you during that term and you passed away, your loved ones would receive a lump sum of money, called a death benefit.
For example, let's say you buy a 20-year term insurance policy. That means you'll have coverage for 20 years, and if you were to pass away during that time, your loved ones would receive the death benefit.
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Now, you might be wondering why someone would want term insurance instead of other types of life insurance.
One reason is that term insurance tends to be more affordable than other types, like whole life insurance. Because you're only getting coverage for a specific period of time, the premiums are usually lower.
Another reason is that term insurance can be a good way to cover specific financial needs, like paying off a mortgage or supporting your family while your kids are growing up. If you pass away during the term, your loved ones can use the death benefit to cover those expenses.
It's important to note that term insurance doesn't build up cash value like other types of life insurance. That means you won't be able to borrow money against it or use it as an investment. But for some people, that's not a big deal.
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Overall, term insurance is a simple and affordable way to provide financial protection for your loved ones. You pay a premium for coverage during a specific term, and if something were to happen to you during that time, your loved ones receive a death benefit.
You no longer need to die to use Term Insurance:
Living benefits in term insurance policies are a relatively new innovation that differs from the simple term insurance policies that were offered in years past. In the past, term insurance only provided a death benefit to the beneficiary if the insured passed away during the policy term. However, living benefits can add additional benefits to the policy that may be used while the policyholder is still alive. These benefits often include accelerated death benefits, critical illness benefits, and chronic illness benefits.
Accelerated death benefits may allow policyholders to receive a portion of their death benefit if they are diagnosed with a terminal illness and have a life expectancy of one or two years. Critical illness benefits may provide a lump sum payment if the policyholder is diagnosed with a covered critical illness such as cancer, heart attack, or stroke. Chronic illness benefits may provide a regular income stream to help cover the costs of ongoing care for chronic conditions like Alzheimer's disease or Parkinson's disease.
Living benefits have become increasingly popular in recent years due to rising healthcare costs and the financial strain that a critical illness or chronic condition can place on a family. According to a report by LIMRA, an industry research organization, living benefits were included in approximately 85% of term life insurance policies sold in 2020, up from just 50% in 2015.
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Term insurance with living benefits, is a type of life insurance policy that provides coverage for a specified period of time (the "term") and includes additional benefits that can be accessed while the insured is still alive.
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Many companies in the industry do not offer the living benefits portion of Life Insurance and still hold the “you must die to use it” platform.
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In general, people who are between the ages of 35 and 55 may be the most common age group for this type of insurance. This is because this age group is often more likely to have dependents and may be more concerned about protecting their family's financial security in the event of their own illness or death.
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Term insurance with living benefits can be marketed and sold as a long-term care supplement in certain cases. The Chronic Illness Benefit (CHIB) that is typically included in term insurance with living benefits policies can provide a monthly income to help cover the cost of long-term care expenses if the insured is unable to perform certain activities of daily living.