Most people envision fantastic futures for themselves and their families. And whether you’re sending children to college, purchasing a new home, or starting a business, your income is the engine that turns your aspirations into reality. But what if you were to die? How would this affect your family’s plans?
Life insurance has proven to be one of the most cost-effective ways to safeguard the dreams of many generations of families. While you could never be replaced, life insurance can help your family handle the financial pressure resulting from a loss of income due to premature death. Usually passing to your beneficiaries free from federal income tax, life insurance proceeds can help preserve your family’s standard of living, cover outstanding debts, and keep their aspirations alive.
Term life insurance offers effective protection for times when people need it the most.
Why is term life so popular?
Term insurance is perhaps the most popular form of life insurance—and for good reason. It can provide cost-effective protection, often with a guaranteed premium for a set period of time. If you die while the coverage is in force, the face amount is paid to your named beneficiary. At the end of the premium guarantee period, you may continue coverage at a premium that is higher and will increase each year–but which starts lower than a comparable permanent (or whole life) insurance plan.
This initially lower premium makes term insurance a perfect choice when you have a temporary need for life insurance protection–such as paying off a mortgage or paying for expenses like childcare, elder care, college tuition, or credit card debt.
Term does not accumulate cash value nor earn dividends which keeps the cost lower than permanent insurance. There are two basic group term life insurance types: annually renewable term (ART) which renews each year at a scheduled premium and level premium term which features a fixed premium for a specific number of years and then increases in subsequent years.
When is term life appropriate?
Term insurance may be suitable for people in several situations. Here are just three examples:
- Temporary need for protection. People often use term insurance when taking out loans such as a mortgage. For example, term coverage in the amount of the loan could assure the loan debt is repaid if the insured dies. Or a business owner who borrows money–perhaps to expand his or her operation–could purchase term coverage in the loan amount. Parents may use term to help cover their children’s college educations in case something happens to the parents before graduation. In short, whenever life insurance is needed for a specific period of time, term presents a solution.
- Budget-minded choices. In situations where life insurance is essential, but dollars are scarce, term could serve as a stopgap. Individuals fresh out of college and starting careers may consider term coverage if they have student loans to pay off so that if they die before their loans are repaid, that obligation does not fall to their estate.
- As a supplement to a full financial portfolio. Term insurance is excellent as part of a larger financial plan to leave a sufficient legacy for one’s children and grandchildren. Will remaining savings be enough? What if medical needs draw down those funds? Life insurance can be a part of an overall financial strategy to leave a lasting source of funds.
What to Look for in a Term Life Plan
1. Check out the plan features
Review the plan carefully to make sure it is guaranteed renewable—meaning that you can renew your coverage without undergoing a physical exam. Understand the rate classes because they will impact your cost. During the current pandemic, review the underwriting rules to see if you are required to take a physical exam or submit fluids or take an EKG. In some cases, you may be able simply to answer the underwriting questions and provide your medical provider information.
2. Cost isn’t everything
Most experts advise against shopping for the insurance plan with the lowest premium. Before worrying about saving a few bucks, be sure that the insurance company is financially sound. Check its longevity, size, and ratings by reading what independent ratings agencies such as A.M. Best and Standard & Poor’s which publish annual ratings of insurance companies, have determined.
3. An insurance plan created for you
The AIA Trust and its independent advisors have done the research and offer two group life insurance plans underwritten by New York Life Insurance Company designed with you in mind to help make your financial futures more secure.
To find out more including features, costs, eligibility, renewability, limitations, and exclusions visit out Term Life Insurance page. Or call Hagan Insurance Group, the Plan Administrator for the AIA Trust program at (877) 801 3727.
CA Insurance License # 0H62489; AR Insurance License # 94726. Underwritten by New York Life Insurance Company, NY NY 10010 on policy form GMR. 1870953