Affordable Level Term Insurance – Is Level Term Insurance the Right Type of Coverage?
Level Term Life Insurance is often recommended as a viable financial product for the elderly, in part because of its safety. A level term insurance policy provides a death benefit and premiums remain the same throughout the life of the policy. Level term policies usually last ten to thirty years, at which point they expire. If you die within the term of your policy, your beneficiaries receive an immediate tax-free lump sum.
If you purchase insurance on an annual basis, you may want to consider taking out an additional insurance policy every year, in order to cover the cost of funeral expenses and any loan obligations that you or your beneficiaries may have. The additional cost may be beneficial if you have significant investments or assets that will require extensive and expensive legal representation. You can also choose to take out a single insurance policy for the entire family in the event of your untimely death. The policy will pay your beneficiaries an amount equal to the value of your death benefit, minus the premiums, if your life insurance policy was ever surrendered or cancelled.
Once you reach the age of seventy-five (the first year you are allowed to participate in Medicare), you can enroll in Medicare Parts A and B. To qualify for Part A, you must be born within certain age brackets. If you are born during the eligible age bracket, your premium for the initial enrollment period is free. If you are younger than the eligible age, your premiums may be higher. Once you become eligible for Medicare Part A, you will receive a monthly benefit check. If you become eligible for Medicare Part B, you will begin receiving benefit payments.
Most insurance companies offer some sort of guaranteed renewable term life insurance coverage. These plans provide the option to either purchase continuously or convert your premiums into cash value. If you are at least forty-two years of age, you can convert five-year premiums into cash value at any time.
With level term ends, the policy will become worthless if your death benefit is paid out before the term expires. The premium payment will then accrue interest. The only way to assure that your premium payments will not accrue interest is to cancel your policy before the term ends. If you choose to remain in your insurance coverage past the original term of ten years, the premiums will convert to a cash value. The ten-year grace period applies only if the insured is not dependent upon any major medical insurance policy, such as Medicare.
Level term policies are very flexible. Depending on your personal circumstances, you can select a variety of options to help insure that your loved ones do not suffer financially after your death. Some policies allow your loved ones to utilize the policy as their primary means of paying the mortgage, college tuition, rent, and other expenses. Others allow your loved ones to borrow against the policy as needed.
Renewable term life policies allow you to take advantage of an investment’s potential. If your investment grows at a certain rate each year, you can even cash in on your initial investment during your term life. This is beneficial if you have a family with children that need financial support every year but cannot afford to pay higher educational fees or contribute towards retirement funds.
Each of these coverage plans has advantages. Level term life insurance is among the most affordable, flexible, and customizable options available. To learn more about other types of insurance coverage, talk with an independent agent. They will be able to answer all of your questions and guide you toward the affordable plan that is right for you.