Surely, there must be some fine print or misconceptions about term, right?
… Yes, there are!
Let’s review the most commonly misunderstood aspects about term life, so you can determine if term is still the best choice for you.
Quick Article Guide:
Yes, the majority of carriers will allow you to renew your policy without providing proof of insurability. Most will allow you to renew it until your 95th birthday. A few will even go up to age 105.
However, in most cases your premium will be exponentially higher the first year after the guaranteed term has ended. In addition, each subsequent year, your premiums will only grow exponentially higher. Unless you’re terminally ill with less than two years to live, it’s highly unlikely paying these exorbitant insurance premiums will make any financial sense whatsoever.
If you still have a need for life insurance and relatively healthy, you’ll be much better off going back into the marketplace and shopping for another term policy that meets your current needs. If you will be reshopping, review our affordable life insurance hidden secrets most consumers overlook. You may first wish to review life insurance basics.
Misconception #2: I outlived my 10, 15, 20, 25, 30 year term policy. Don’t I get my premiums refunded?
Unless you purchased a return-of-premium term policy, the answer is no.
Term life insurance is simply pure protection that only pays a death claim if you died during the term of the policy, assuming the policy was in force at the time of death. It works much like auto and homeowner’s insurance policies where if no claims were made, the premiums become profits to the insurance companies and also used to pay actual claims and operating expenses. However, unlike auto and homeowner’s insurance there’s very little grey area on what’s covered. With life insurance, either you’re alive and no claim is paid, or you’ve died and the insurance company pays the death claim.
Misconception #3: I’ve been a loyal customer paying premiums all these years. Isn’t it bad business sense to suddenly raise my premiums?
This is a common assumption. Actually, this circles back to your goals when you bought your policy and the guidance your agent gave you at the time you purchased your policy.
Most people don’t need life insurance forever, or they can’t afford life insurance that will last their lifetime. This is why term life insurance is the most common type of life insurance purchased. At the time of purchase, your agent should have discussed with you that the rate is locked in for a specific number of years. Afterwards, the rates will increase if you choose to renew. It’s important to determine the number of years you’re the most financially vulnerable.
For the vast majority of people with kids, they need life insurance until their kids are grown, through college, and financially independent. Without kids, the right term might be until retirement. Many people nearing retirement with a pension option will also use life insurance as a safety net allowing them to maximize their pension.
This is why having a good agent is important when buying life insurance. At JRC Insurance Group, our highly-trained, seasoned agents can help you find the right policy that fits your needs at the right price from the 40 carriers we represent. Give us a call today at (855) 247-9555.
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