There Are Many Types of Life Insurance

Term Life Insurance

Term life insurance is a popular choice when your desire is to provide coverage (protection) during the years that you are building a family and career when the sudden loss of your income would have the most disastrous impact on your loved ones’ lives. And the coverage is usually quite affordable.

For example, a healthy 30-year-old man or woman can buy a 20-year, $500,000 policy starting at $21 per month. This policy could offer protection until the mortgage is paid off or the kids are adults.

Term life insurance coverage lasts for a specific period of time — typically 10, 15, 20 or 30 years. Once the term length is up coverage ends, or you can renew it, but at a higher price.

It is usually easier to understand and purchase term life insurance and it can provide dependable coverage at an affordable price.

We can help you determine the term that best fits your needs as well as whether you would benefit from variations on term life insurance such as medically underwritten, simplified issue, or return of premium policies.

Medically underwritten term life insurance

If you know you are fit and in top health, then maybe medically underwritten term life insurance would be the most affordable for you. These policies give the life insurance company an opportunity to fully assess the risk of your personal policy which leads to lower prices and higher death benefits if you are very healthy at the time of the screening.

Often a medical exam is required, but it also takes your health history, family history, and lifestyle into consideration to determine final pricing.

Simplified issue term life insurance

Simplified issue policies offer term coverage without a medical exam. Because no medical underwriting is conducted, these policies are usually at least several times more expensive than a medically underwritten policy.  For example, the same 30-year-old man who could buy a 20-year, $500,000 for $21 per month would pay $63 per month for a 20-year, $500,000 simplified issue policy.

A simplified issue policy might be the right choice if you suffer from chronic health issues that disqualify you from medically underwritten coverage.

Return of premium policies

Life insurance companies make their profit off the fact that only a small percentage of policy holders die during their term of coverage. Then it is understandable that you might have reservations about paying premiums for that unlikely, but worst outcome scenario.

A return of premium policy, which in some cases can also be an optional rider that’s either available for a fee or is included as part of a term insurance policy, refunds the insurance premiums paid if you outlive the term of your policy. Generally, if you purchased a 30-year term life insurance policy, for example, and lived beyond the duration of the policy, most or all of the premiums you paid get reimbursed to you. That’s a mighty attractive option, if your budget allows. Return of Premium riders will increase the price of your premiums significantly for this feature.

There are some caveats and considerations before moving in this direction.  We can help you with a cost comparison and a close look at whether that scenario would work for you and your family.