Term Life insurance is a temporary coverage option that is designed to protect an insured for a specified period of time, usually 10, 20, or 30 years. After the term is over, the insured no longer has coverage. In some cases, depending on the carrier and policy details, the insured has an option to renew the policy, but at a higher premium. Also, in some cases, all premiums paid can be returned to the insured after coverage ends. This is called ROP, or Return of Premium Term Life Insurance.
Your selected term life policy can either be level (premiums stay the same throughout the policy term period), or in some cases it may increase over time, usually every 5 years. The advantage of term life insurance is that is low cost, as opposed to Whole Life insurance, a permanent coverage option, which can cost two to three times more than term insurance. Although term policies are inexpensive, they are not always the best option. As a top independent Louisiana Term Life Insurance Company, we can help you find the best option for you. To learn if term life insurance is right for your unique situation, please contact one of our professional agents.
An advantage of Term life insurance is its low rates, especially for younger people under 50. The younger a person is the cheaper the Term insurance. A person can get a very substantial amount of coverage at a very low rate with a Term product.
Term life insurance is a great choice for short term debt coverage. For example, if you a had a 30 year mortgage along with a 30 year term and you passed during that term, the death benefit would allow your beneficiary to pay off your home.
The death benefit payout is generally tax free to the beneficiary because it is not subject to federal income tax laws and is also exempt from state taxes when paid out as a death benefit.
John and Kate are newly married and plan to one day have children. Both work but John is the breadwinner. They've recently purchased a home based on the idea of John handling the bulk of the mortgage payments while Kate's salary helps with minor expenses. Neither John or Kate have life insurance. Two years into their marriage the couple give birth to their first child. Kate takes time off from work to take care of their child while John continues to work to pay the mortgage, but has now taken on all of the rest of the bills as well with just his income. One day John gets into an untimely accident and dies, leaving Kate to not only take care of their child, but also all of the bills. Unfortunately, Kate has to foreclose on their home and move back with her mother until she can get on her feet.
Problem: John and Kate have no life insurance or sufficient savings. Following John's death, Kate is left to pay John's funeral expenses, along with the mortgage and all other bills. She's forced to raise donations to pay for John's funeral expenses, and eventually forecloses on their home.
Suggested Solution 1: John and Kate are in their mid twenties, so life insurance is fairly inexpensive at this time. They can purchase a "First to Die" policy which will pay a death benefit to the surviving spouse after the first one dies. The death benefit amount, which will help determine the cost, will depend on a variety of factors such as projected future expense and income needs, as well as official health status. This policy does not provide a payout to their child if both John and Kate die simultaneously, and if they survive the term, they will no longer have coverage.
To avoid a lapse in protection, they will also want to purchase additional coverage, such as a Whole Life or Universal Life policy, which are both permanent products. Again, because they are both young, the cost of these policies will be much cheaper, and they will never have to worry about not having coverage, qualifying for coverage, or leaving money behind for their child should they pass away later on in life.
Suggested Solution 2: John and Kate can purchase a Mortgage Protection term life policy to assure they don't lose their home in the event of one of their untimely deaths. The premium will vary based on their health, but they are young and healthy so they'll more than likely get a preferred rate. This policy will pay the beneficiary a tax free, lump sum death benefit to pay off the remaining mortgage balance including associated fees. If there is any portion of the death benefit left the beneficiary can use the funds however he or she wishes.
In addition to the mortgage protection term policy, John and Kate need to purchase additional coverage for themselves to assure the surviving spouse and dependent can maintain their lifestyle, pay current and future expenses, and or provide income replacement since the family will be losing an income source when should one of them pass away. We recommend a simple policy mix that includes two individual term and whole life or universal life policies.
Overall, 7 in 10 of all households said they would have trouble covering everyday living expenses after several months if the primary wage earner died.
2016-LIMRA, Facts About Life
Would your household suffer if the primary wage earner died?
Vanessa is a 30 year old, single mother of four, who works a full-time job making $35,000 annually. She just purchased a small home but has no life insurance for herself or her two children. Since Vanessa is the breadwinner in her family, if she passes away while her children are young and dependent on her income, she will have to hope that the person whom will care for her children, in the event of her untimely death, will have enough money to provide for each of them for years to come, including future educational costs should the children go to college.
Vanessa must also hope the new caregiver will be able to maintain mortgage payments, real estate taxes, and maintenance costs on her home until her children are older and making enough money to take over the costs of the home. This not only puts Vanessa's children at a disadvantage, but it also creates a potentially serious financial burden on the children's new caregiver. Further, Vanessa has to consider how she will be able to bury any one of her children, should one of them pass away untimely, as she does not have at least $10,000 of savings in the bank.
Problem: Vanessa has no life insurance coverage on herself or her two young children, neither does she have enough cash saved up for burial expenses for her family. She purchased a new home and relies solely on her income. If she passes untimely she will put her children and their assumed caregiver in a very difficult financial position. If any of her children pass away untimely she cannot afford to bury them.
Suggested Solution 1: To ensure her home remains with her children and that the mortgage and all other relevant expenses are paid in the event of an untimely passing, Vanessa should consider a Mortgage Protection life policy. The type of MP policy that may work best is a Term with a Return of Premium Rider. In addition to its affordability, this policy type also assures that in the event Vanessa lives through the entire term period, she will receive 100% of the premiums she paid into the policy. So at the end of the term period, if Vanessa is alive she will receive a lump sum check in the full amount of her 30 years of paid premiums.
Vanessa also needs coverage on her family, including herself. She can choose a small whole life policy that will provide permanent coverage at a level/fixed rate. To obtain permanent coverage she can also choose a universal life or guaranteed universal life policy. To get a large amount of short term coverage for a low cost she can then lock in a low rate with a 30 year term life policy to achieve a good mix of coverage.
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Carrier products and requirements vary. Therefore, certain Term Life Insurance policies and/or associated riders and features may not be available in all states, and policy terms and conditions may vary by state as well.
These Term Life Insurance quotes are only general descriptions of coverage. A complete statement of coverage can only be found in your policy.
Empyral Insurance Group agents do not provide investment, legal, or tax advice under any circumstances. For that specific advice we recommend you speak with your investment, legal, or tax attorney or advisor.
These policies have exclusions and limitations. For costs and complete details of coverage, please contact an Empyral Insurance Group agent/insurance producer.
The purpose of this communication is the solicitation of insurance. You may be contacted by an agent/insurance producer from Empyral Insurance Group. The premium class may vary based on underwriting review and may be different or the policies may not be available. A medical exam may be required.
Empyral Insurance Group, LLC (Currently licensed in Louisiana, Mississippi, and Texas only)
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