What’s Your Objection to Term Life Insurance?
One objection to purchasing term life insurance is just that: when the term is over, the policy is finished. That’s it. No more coverage.
Many people worry they will outlive the policy period and ‘waste their money’ on something they didn’t need. It can be difficult to counter these arguments except by explaining how term insurance can be an affordable way to provide life insurance coverage for a specific time period.
Until now. Insurance companies are offering term policies that actually return the premiums you’ve paid after the level premium period ends. In other words, if you purchase a 20-year term policy and are still living when the 20-year level premium period ends, the premiums you paid will be returned to you, in many cases free of federal income tax.
Those returned premiums can have a number of uses. If you still need life insurance, you could purchase another policy. You could also use the premiums that are returned to pay down your mortgage or even add to your retirement savings.
Life insurance can provide peace of mind that your loved ones’ financial burdens may be eased if you are no longer there. The benefit provided by life insurance can help keep dreams alive.
One objection to buying term life insurance has been addressed by a policy that may return the premiums you paid.
Ask an insurance professional about a product that provides needed life insurance coverage but
has the potential to return your premiums at the end of the term.
— Written by Adam Rope, a State Farm agent based in Waxahachie
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Comments
By Randy Smith on August 7th, 2009 at 4:22 pm
Adam makes a good case for the need for life insurance, but glosses over the fact that one’s insurability decreases as one ages. A 42 year-old bread winner with a few college-bound teenagers faces the prospect of not being able to repurchase a term policy after buying a 20 year policy at age 22. (“…insurers also have taken a harder stance on medical underwriting guidelines, experts say.”-from 6/28/09 WSJ article referenced below). A person would be wise to look at a term policy that offers coverage well beyond a 20 or 30 year period. It gives the person options later in life that an uninsurable condition that would prohibit renewing an expiring 20 or 30 year policy.
Also, there was a headline WSJ stories on June 6 & 28 (http://online.wsj.com/article/SB124450333064895949.html and http://online.wsj.com/article/SB124614721578265053.html) that talked about insurers either discontinuing sales of return of premium policies or raising premiums as much as 35%. (“They cite higher capital and reinsurance costs linked to tighter credit markets, which are making it costlier to maintain needed cash reserves, combined with lower investment returns.”)
He should have mentioned permanent, whole life policies. They guarantee a person coverage for life and can even build value as an asset to supplement their retirement or pay for long term care insurance. A person should start looking first at the AAA rated mutual insurers for this type of policy since they can return the most to holders of permanent policies. While these policies require a much greater premium commitment, they can become a “forced saving” plan that so many people need and have gotten away from since the days of our grandparents! Lastly, the death benefit continues to grow, as guaranteed by the financial promise of the insurer (hence, the AAA financial rating recommendation).