What is term life insurance?

Term life is insurance coverage for a specific period of time that pays a death benefit if the insured passes away during that timeframe. Generally available for 10, 15, 20, 25 or 30 years. Your age at the time of application is the determining factor as far as how long of a term you qualify for. It’s much more affordable than Whole Life or Universal Life because it has an end date and doesn’t build cash value.

Term life insurance affordable way to protect your family during your peak earning years and the period when you have the most amount of debt, such as a mortgage for example. Many people carry term insurance in addition to permanent coverage, like UL & WL. This strategy allows you to have more coverage during the years you need it most and to spend less on premiums in your later years.

Typical characteristics of term life insurance:

• Temporary protection
• Low cost compared to permanent coverage
• Does not build cash value
• Usually renewable at end of term
• Possibly convertible to permanent coverage
• Available with or without medical exam

How long of a term do I need?

You can determine how long of a term would best suit your situation by taking into account how long you have left on your mortgage and other debts. If your goal is to ensure that your family can maintain their lifestyle at a similar level to what it is now, a term policy that goes beyond the timeframe of having your debts paid off may be a wise choice. That way, if you pass away before your debts are satisfied, your beneficiaries can settle them and possibly have money left over. Of course, that depends on the amount of death benefit of the policy vs. your outstanding debt at that time.

Everyone’s situation is unique, so it’s important to plan ahead when considering how long you will need coverage for. For example, if you have children that will be out of school and in the working world in 15 years, then a 15-20 year policy may be right to protect them. On the other hand, if you plan to retire in 25 years with little or no debt at that time, a 25 or 30 year policy might make the most sense.

If you’re protecting a specific debt, such as a business loan, then at minimum your term life policy should be as long as the loan payoff schedule.

Another factor to keep in mind is that your premium rates are lower today than they’ll ever be. That’s because rates are tied to your age. The older you are, the higher the rates. With that in mind, it’s usually wise to lock in those lower rates for as long as you can.

Can I renew my policy at the end of the term?

You can keep most term policies active at the end of the term. However, your premiums will typically increase dramatically. That’s due mostly to the fact that you’re older than when you first took out the policy and your health is most likely not as good as it was. In most cases, it will be less expensive to look into a new policy. Also, you may not need as much coverage at the end of your term policy, which can help keep the cost down.

If you’re current policy is set to expire soon, contact me to discuss your options. A new policy that’s tailored to your current needs might be significantly cheaper than keeping your current term policy. However, it could be best to keep paying on that policy if you have developed health problems over the years. That’s if your insurance company allows you to extend coverage beyond the term without a new medical exam. Another possibility might be to convert all or part of the death benefit in your current term policy. More on policy conversion below.

How much insurance do I need?

You can figure out how much life insurance you need in a few ways. One of the most common is to calculate the expenses & debts your beneficiaries will incur if you died. Mortgages, credit card debt, auto loans, burial costs are typically of primary concern for most people.

You may also want to provide a salary replacement to your spouse or other family member(s). This is usually calculated for a specific amount of time. Many people combine both methods, calculating total debt then adding 5/10/15 years of their salary.

How much will a term life policy cost?

Life insurance companies assign applicants to specific rate classes. Those classes are what determine the amount someone will pay in premium and will be based on several factors. Of primary importance in the determination of your rate class are:

• Your age
• Your build (height & weight)
• Your health (current & historical)
• Your immediate family’s health history
• Whether or not you use tobacco products
• If you have any hazardous hobbies
• If you work a dangerous job
• If you have felonies and/or misdemeanors
• If you have several driving violations and/or DUIs

Life insurance companies will assign you to a rate class based on your level of risk. This is determined during the underwriting process using, in part, answers you provide to the company’s application questionnaire. Your medical records, driving records and Medical Information Bureau file will typically also be requested during underwriting.

My job starts by pre-qualifying you to anticipate which rate class you will most likely fall into. That way I can provide you with accurate quotes and suggest which insurance companies will look at your application most favorably. More on this below.

Do I need to take a medical exam?

There are options for no-medical exam insurance policies. If you qualify for a no-medical policy, the process of putting coverage in place is much shorter. If you’re healthy and don’t want to deal with the hassle of a fully underwritten life insurance policy, a no-exam option is often not much more money.

Part of my process includes determining if you’re a candidate for a no-medical policy. I will also help you compare fully underwritten options to see which options is a better fit for you.

What does converting a term policy mean?

You’re converting a term life policy when you request to change it into permanent coverage, such as a universal life policy. Many term policies can be converted until a certain age, or within a specific amount of time into the policy. Some policies even allow conversion without the requirement for a new medical exam. This can be huge if your health has declined since you put the term policy in place. That’s because any new health issues can bump you into a more expensive rate class. It’s like being ‘grandfathered’ into the permanent policy using your health picture from 10 or 15 years ago.

How do I get started?

You can either choose one of the quote options on this page, send me an email, or give me a call at 512-922-1273 to start the conversation. During a free consult, I’ll gather information about your health and lifestyle. That allows me to pre-qualify you so that I can look at the right insurance policies. That means carriers that will look at your application in the most favorable light. Your unique level of risk will be considered differently against each insurance company’s underwriting guidelines. You’ll improve your odds of approval by applying with the company who’s the best fit for your situation.

Applying with the “wrong” company can result in a declined application if you have certain health conditions or avocations. Not only is that a huge waste of time, but you will now have a declined application on record with the medical information bureau (MIB), along with the reason for that decision. The MIB is used by insurance companies to report any findings about an applicant’s health, driving record, hazardous avocations, among other things. Having a declined application in your MIB record may cause the next insurance company to also decline your application, or at the very least look at it under the microscope.

My ultimate goal as an independent life insurance broker is to help my clients obtain the right coverage. Not only at the best price available, but with the appropriate insurance company for their unique situation and level of risk. I will never suggest that you apply for the cheapest option if I believe that for one reason or another you will not qualify for that specific insurance policy.

Life insurance is by no means a one size fits all purchase. Reach out today and let’s discuss your options!

-Danny Gallant
Life Insurance Broker
512-922-1273