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Term is the lowest cost life insurance product available. When you buy term
life, you are purchasing "pure" insurance which typically does not include a
cash value or a savings feature. Term Life insurance, as the name implies, is
purchased for a particular "term" or length of time. Once that term period has
arrived, and you do not convert your term policy to a "permanent" type, your
life insurance policy will expire. If the insured dies within the "term period,"
the predetermined death benefit will be paid to the beneficiaries.
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There are several steps to effectively buying life insurance. Evaluate what you
need and will need in the future, explore the types of insurance available,
educate your self as much as possible, shop, shop and shop some more. The
legwork and evaluation of available policies can be time consuming, but if you
think about it, this is a huge decision and undertaking. Take your time.
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This is a tough question. You need to add up the total your survivors will need,
then compare with the coverage you have. Consider funeral or final expenses,
survivor education expenses, survivor living expenses, how much debt you carry,
estate taxes, inflation and any other expenses that may arise for your
survivors. When you’ve reached a total for all these expenses, add up your total
coverage (life insurance, social security survivor benefits, pension survivor
benefits and available assets). If the survivor needs are greater than you
coverage you need more coverage. If you do not have life insurance – get it
now!!!
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Level term insurance includes low premiums and steady coverage over the term
of the policy. In other words, your premiums do not go up and your coverage
does not go down as long as your premiums are current. "Annual" or "Yearly
Renewable Term" offers the lowest initial cost life insurance available.
Premiums for this type of life policy will start out very low; however, the
premium will increase each year. In general, Yearly Renewable Term policies
are most efficient during the first 3 to 4 years. If you plan to keep your
policy for longer than 3 to 4 years, you should consider Level Term
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Term Life Insurance is bought by millions of people for a number of reasons.
Families use Term Life Insurance for security. In case the insured passes
away, your Term Life Policy insures there will be money to use to pay for
your home, college, outstanding loans and other major expenses. Small
Business Owners use Term Life Insurance as low cost debt protection to cover
notes, lease obligations, business real estate mortgages and other expenses.
Business Partnerships often use Term Life Insurance to buy out partners in
the event of their death. For example, the deceased's beneficiary gets the
insurance proceeds and the ownership in the company is then transferred to
the remaining partners.
Corporations use Term Life Insurance as stock purchase redemptions. In this
case, the corporation gets the insurance proceeds and buys back the stock
from the deceased's beneficiary, normally the surviving spouse or estate.
For businesses, Term Life Insurance can provide real benefits for the
beneficiaries with no negative cash flow impact on the company.
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Individuals are rated by their age, health history and in some cases, by
their careers. Younger people generally have lower premiums.
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You can usually buy life insurance at any age. The cost associated with risk
goes up significantly and there may be special requirements established by
the company. Detailed research and assistance from a professional are highly
recommended to get the best coverage at an affordable rate.
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If I have a medical condition, can I still get
life insurance?
You can typically get coverage regardless of condition, but you will have to
pay a steep price in many situations. If you are following a prescribed
treatment and doing everything possible to properly maintain your condition,
your insurability is improved. The greatest impediment to buying life
insurance when faced with a medical condition is the cost. As the risk to
your life goes up so do the premiums.
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Most companies consider pipes, cigars and cigarettes to be the same and it
will definitely be expensive to get coverage. For the most part a smoker is
a high risk and will pay accordingly.
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Term Life Insurance is a good choice for many people, but NOT for the
following reasons:
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To fund expected federal and/or state estate tax obligations. |
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To fund an irrevocable life insurance trust. |
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To fund trusts for the purpose of providing an estate. |
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These reasons would be better served with permanent life insurance, either
whole life or universal life. We suggest you seek counsel from either your
estate tax attorney, financial planner, or your CPA.
If you have any other questions please use the
Email Us and we will answer them for you.
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