Term Life Insurance
Description
Term life insurance is a contract between an investor and an insurance company to protect survivors against hardship due to the death of the insured. The insurance proceeds are paid to the beneficiary, or beneficiaries, free of ordinary income tax, at the time of death. There are no investment attributes to term life insurance and no cash build up, which makes the initial premium less expensive than that on permanent insurance. Term life insurance is often referred to as temporary life insurance.
The amount of premiums payable under a term life insurance plan depend on age and health. Over time, the premiums will increase with advancing age. The insurance company generally cannot cancel the policy, but the policy owner may cancel at any time. The insured must meet the company's insurability standards at the time of purchase.
Objective
To provide death benefits as economically as possible with the idea of eventually canceling the policy.
Suitability
Term insurance is primarily suited for investors with short-term life insurance needs (10 years or less) or those with a long-term need but whose budget won't allow for higher premiums. Ideally, the term insurance buyer will eventually be self-insured.
Product Features
- Low cost - Term life insurance is inexpensive. This is especially attractive to younger investors who have a smaller net worth.
- Convertibility - Term life insurance may be convertible to a permanent policy without insurability.
- Fewer Long-term Benefits - Term insurance provides no retirement benefits or cash value later on.
- Rising Premiums - Premiums rise with age and may eventually become unaffordable.
For more information, please contact your local financial advisor.
