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Life Insurance
Term Life Insurance
General
Term life insurance provides coverage for a specified period of time, which usually
ranges from 10-30 years, in 5-year increments, depending on your need for coverage.
A death benefit (face amount) is established when the term life insurance policy
is applied for. The beneficiary receives the death benefit amount if the insured
passes while the policy is in-force.
Policy premiums are available on a guaranteed and non-guaranteed basis. Guaranteed
policy premiums remain level throughout the policy's term. Non-guaranteed policy
premiums usually remain level for a pre-determined period of time and then begin
increasing.
There are a variety of options available on most term life insurance policies, including
convertibility options, child riders and accelerated benefit riders. Policies are
designed to meet a specific need for a stated period of time and can be particularly
useful to anyone who has a financial liability, such as a home mortgage.
Term life insurance provides the lowest priced coverage available in the marketplace.
It buys the greatest amount of coverage for the least amount of premium, relative
to other forms of life insurance such as whole life or universal life.
Return of Premium (ROP)
Traditional term life insurance, discussed above, expires worthless at the end of
the term. Return of premium term life insurance policies refund 100% of your premiums
if you live to the end of the term period. This innovative product brings together
the advantages of traditional term life insurance such as affordability and premium
guarantees, with a refund of premium feature. Furthermore, your refund is 100% tax-free
and guaranteed by the carrier.
How is this possible you ask? The insurance companies that offer this type of product
charge more for it than for their traditional term life insurance products. The
insurance company is then able to invest a portion of the premium for capital growth.
As a result they are able to return your premiums at term-end, but if you cancel
your policy before the sixth policy year no refund is available. There is a graded
scale for years six and beyond, where a percentage of the total premium is refundable
according to the year you surrender the life insurance policy.