Once you have determined you need term life insurance, it’s time to choose a policy. Be aware that many policies differ on certain points, so you’ll want to ask a few important questions before purchasing a plan. The following questions can be answered by your agent or found within the information that has been provided to you concerning the policy.
How Long Should My Policy Last?
Term life insurance policies last for a specific amount of time — most policies last for 10, 20, or 30 years. Your decision on which length of time to pick depends on why you need the life insurance in the first place. Some people purchase term life insurance just to make sure that short-term debts would be covered in the event of their death. Other people are looking to take care of long-term obligations such as paying off a mortgage or putting children through college. For these types of goals, a 20 or 30-year plan can be more beneficial. Insurance providers offer a variety of terms to help meet the individual needs of each client. This makes it easy to find a plan that fits your particular goals and needs.
What are the Exclusions?
All insurance policies will have exclusions or special circumstances that could affect your family’s ability to receive payments at the time of your death. Some exclusions can nullify your death benefits altogether. These exclusions will vary from carrier to carrier, so it is important to ask specifically which exclusions are included in the policy you are reviewing.
Some of the most common exclusions are suicide, dangerous hobbies or occupations, an aviation exclusion, and an act of war exclusion. Hobbies are one of the most varied types of exclusions, so make sure you check the details on this if you participate in any hobbies that could be deemed risky.
What Happens When My Policy Expires?
Because term life insurance policies are for a set period of time, most individuals who purchase them will live to see their expiration. If you think you may want to continue having life insurance coverage after it expires, you’ll want to review the options for continuing your coverage on the chosen policy with your agent. Certain term policies have a renewable or convertible benefit to make sure you can continue life insurance coverage in some form once it expires, even though you’re older and possibly in a different state of health than when you first bought your term policy.
What If I Can’t Pay My Premium?
Although your premium might seem affordable now, if your financial situation changes in the future it might be difficult to pay your premium. you should be aware of the consequences for missing payments on the policy in question. Each carrier will have different types of penalties for lapsed payments. You should only purchase a policy with consequences you can live with.
Purchasing term life insurance is a great way to help ensure your family’s financial security. Click here to review term life insurance plans, available for members of the FICPA sponsored CPA Insurance Marketplace.