Term Life Insurance
What does "level" refer to in level term insurance?
"Level" means that the death benefit is "level" and doesn't change through the life of the policy
Special Features of Term Policies (1)
(1) Renewable - Policy Owner can renew the insurance at the end of the term without proving evidence of insurability *New premium is based on attained age
Special Features of Term Policies (2)
(2) Convertible - Provision allows the policyowner to convert the policy to a Whole Life policy without proof of insurability *Premium is based on on insured's age when converted
What is Term Insurance?
*Life insurance that is provided over a specified time period and does not build a cash value -It provides the greatest amount of coverage for the lowest premium compared to other products
What are the different types of Term Insurance?
1. Level 2. Increasing 3. Decreasing
What is Annually Renewable Term Insurance?
Annually renewable term (ART) is the purest form of term insurance in which the death benefit remains level; the policy may be guaranteed renewable each year without proof of insurability, but the premium increases annually according to the attained age.
What is Decreasing Term Insurance commonly used for
Debts like mortgages b/c you pay it off over time so the amount of money needed to pay it off shrinks
Important to know
Insured must die during the term for the benefit to pay out
Is Decreasing Term Insurance renewable?
Not renewable b/c the death benefit shrinks to $0 at the end of the term (usuallhy convertible though)
Premium under term insurance
Premium is always the same throughout the life of the policy regardless of which type of term insurance it is
What is premium based on?
Premium is based on "attained age" (the insured's age at the time the policy is issued
What happens if the term expires?
The insured can renew the term when it expires, but the premium will be based on the attained age when it is renewed
Decreasing Term Insurance
The premium remains the same, but the death benefit decreases over time
What is Term Insurance typically used for?
To cover debts, income replacement, or Key Person Insurance
