What is Annual Renewable Term Life Insurance

What is Annual Renewable Term Life InsuranceMany people choose term life insurance for its lower rates and set duration of the policy life. This allows them to budget their insurance needs and at the same time have coverage for children, elderly parents, or even the life of a mortgage. Typically, term life insurance is set for a predetermined term and the rate of the policy remains constant over that term. However, annual renewable term life insurance is another type of term life that may be best for families who aren’t sure how long they are going to need the policy and are willing to accept rate increases when the policy renews.

Defining Annual Renewable Term Policies

Annual renewable term life insurance policies are very similar to traditional term life insurance policies with the exception of the term. Traditional term polices are set for anywhere from 5 to 30 years with a premium that doesn’t change during the life of the policy. However, annual renewable term policies are term life insurance policies that automatically renew annually or at certain time periods, such as every 5 years. The premiums on the policy rise with each renewal period or with the age of the applicant.

Advantages of Renewable Term Policies

The biggest advantage of a term life insurance policy that is renewable is the price. Term life insurance policies are the most affordable life insurance policies on the market. These policies only carry a death benefit and only pay if the death is during the term, which, with renewable term policies is often quite short.

The premiums on annual renewable term life insurance polices are the lowest of the insurance policies. The insurance company is assuming very little risk with these policies and the term is typically very short, some as little as one year. These policies are the ideal choice for people who have lost their employment and thus the life insurance that comes with most jobs. Annual renewable life insurance policies offer coverage until other coverage is obtained.

Types of Annual Renewable Life Insurance

Premiums and premium increases are the main difference in the various types of annual renewable life insurance policies. Some are set to renew and thus increase in price on an annual basis. These policies increase according to the economic situation at the time of renewal, such as inflation and industry standards.

Other annual renewable term life insurance policies have set premiums that increase based on an age table that is provided to the applicant when the policy is underwritten. The good news is that with these policies, the premiums are set according to the tables and won’t increase beyond what is disclosed.

What to Look for in Annual Renewable Term Life Insurance?

If an annual renewable policy is decided on, there are some things that an applicant should take into consideration before purchasing the policy.

The first thing that should be asked is whether or not the policy requires proof of insurability at the end of every term. Some of these renewable policies require the insured to provide proof that they are healthy enough to be insured for a new term. This is simply the insurance company’s way of making sure that a terminal disease has not been discovered during the policy term and that if they are renewed they will likely die during the term. This is one of the disadvantages of renewable term life insurance; however, not all policies have this clause and it is worth investigating.

If renewal and health concerns are issues, there are policies that have guaranteed renewal clauses that provide for renewal without proof of insurability. This is the typical form of annual renewable life insurance. This policy has a guaranteed renewable term, usually from 10 to 30 years. During this term, the policy holder is guaranteed the ability to renew without a health exam; however, they will experience the increase in premiums that other renewable policies have. These policies can become quite expensive if renewed throughout the life of the policy holder; however, the chances of the policy being paid to the beneficiary are much greater than with other renewable term policies.

This type of renewable term life insurance policy is appealing to many people who don’t want to have a gap in coverage in their term life insurance and yet aren’t sure how many years they are going to need the life insurance. While there are advantages to this type of policy, the costs must be weighed as well, as they will become higher as the insured ages.

Annual renewable term life insurance is one option in term life insurance policies that many people opt for in order to give them more options in the term of the policy than they would normally have with other term policies. The premiums are not locked in as they are with other term polices but at the same time, the term is not locked in either.

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What to Expect with a Life Insurance Health Exam?

What to Expect with a Life Insurance Health Exam?Many people are afraid to purchase life insurance because they may have to have a health exam. If the insured knows what to expect with a life insurance exam, it will be easier to sign up and get the policy in effect. The typical life insurance health exam is no different than visiting the doctor for a physical and in many cases, the insurance company will send someone to do the physical at the applicant’s convenience.

Why a Health Exam is Needed?

Most life insurance policies that have a fairly high face value require a physical exam and possibly even permission to request medical records. Life insurance is a gamble. The insurance company is gambling that the insured will have a long life and make premium payments for many years before the policy is paid out. This means that they want to make sure they are charging premiums based on how long a person is expected to live.

In order to get an idea of life expectancy, a health exam is required. This allows the insurance company to know that the insured has answered the health questions honestly and that there are no hidden health concerns, habits that shorten life, such as smoking or even high-risk activities that can shorten life. If so, the insurance company can alter their premiums to protect their investment.

The Examination

Shortly after applying for life insurance, the applicant can expect to have the company contact them to schedule a health exam. This can be done at a local physician’s office that has contracted with the company or even with a nurse of paramedic that has contracted with the company to perform exams in the applicant’s home or office. Once the exam has been scheduled, the applicant can expect the following to occur when the actual day of the exam arrives.

  • Fasting: The medical professional will let the applicant know if they need to be fasting before the exam. This typically means nothing to eat after 8 PM at night and up until the exam is complete.
  • Questionnaire: The insurance company provides the medical professional with the questionnaire. Applicants can expect to provide their medical history in as much detail as is possible from memory. The insurance company will want names, phone numbers, diagnosis, medications and any procedures that have been done. There will also be medical release forms that are required in order for the insurance company to request medical records.
  • Typical Procedures: The medical professional will record the height, weight, temperature, blood pressure and pulse of the applicant, just like the doctor’s office does during a routine office visit.
  • Blood: Many insurance companies will take blood samples to send off for testing. This is why fasting is often requested. These tests check for HIV and other major diseases that could cause the policy to be rejected or a much higher premium applied.
  • Urine: Some insurance companies will ask for a urine sample. This can be used to check for illegal drug use or even ketones which are indicative of diabetes.
  • EKG: Some, but not all, life insurance companies require an EKG. Portable EKG machines make it possible for subcontracted medical professionals to perform EKGs in the applicant’s home.

These are the tests that are typically completed when applying for life insurance; however, older applicants may be required to have more tests, such as treadmill tests and breathing tests.

Advice on Life Insurance Exams

No one can change their health overnight; however, there are some tips that can make the test go smoother and prevent many false results. Some of these tips include:

  • Avoid caffeine, herbal supplements, and even smoking before the exam. These stimulants can cause blood pressure numbers to be high. This could lead to higher policy premiums if the company thinks high blood pressure is a medical condition.
  • Make sure and get plenty of sleep before the exam and try to schedule it for the morning when the body is rested and stress free.
  • Do not exercise strenuously the night before the exam.
  • Be honest. It isn’t going to do any good to lie on the questionnaire, if there are medical conditions, they will come out either in the medical tests or the medical records that are requested.

These tips should help make the exam less stressful and provide more accurate readings in blood pressure and other important numbers that can be affected by stimulants, exercise and more.

The Results

Once the insurance health exam is over, the medical professional will send all of the findings to the insurance agent or company. The applicant will also be provided with a copy of the medical results, which is very helpful if they found something that was unknown. The insurance company will use the test results to determine the policy. They are looking for health conditions that can shorten life.

Understanding what to expect with a life insurance exam often makes it less stressful and lets the applicant make the decision to move forward with the policy.

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What is Family Term Life Insurance?

What is Family Term Life Insurance?Family term life insurance is simply term life insurance that covers the entire family for the length of the term with the caveat being how long the insurance covers children. Some insurance companies cease coverage at age 18 while others allow it to continue until age 21. Families have the option of choosing between whole life insurance and term life insurance; however, most families choose a term life insurance policy for the whole family and possibly a whole life policy for the parents that is put into effect before the age that the polices become expensive.

Family Term Life Polices

Like other term life insurance policies, family term life insurance is an easy life insurance policy to purchase and is an inexpensive way of insuring the whole family for a pre-determined amount of time. Typical family term life insurance policies range in term from 5 to 20 years with some policies having the option to convert to whole life at the end of the term with an increase on premium.

Like other term life insurance, family term life insurance can mean the difference between a family moving forward after a disastrous event or falling on hard times and actually losing their way in life. Families tend to obtain term life insurance policies that have large enough face values to keep the family from being in financial ruin in the event of a devastating occurrence. Many families choose to keep the term of the policy consistent with the term of their mortgage in order to provide protection to the hone should death occur.

Finding Family Term Life Insurance

Searching for family term life insurance is no different than searching for other insurance with the exception of having one policy that covers all family members. The Internet is a great place to start the search for these policies. Many insurance companies specialize in family term life insurance and can help guide the applicant through the process of finding a policy that meets the family needs without costing more than they can budget.

When searching for term life insurance it is important to consider that the premium for children should be very inexpensive, in fact, many policies are less than $5 per month, per child. A child is simply very low risk and so the insurance company can provide coverage with a pre-determined term for the child, typically when they graduate school, for a very low monthly cost.

Determining the Term

It is important to determine how long the family term life insurance should cover. One thing to keep in mind is that the child’s term will typically not be longer than their 18th birthday, although some insurance companies do continue their coverage until age 21. Once this age is reached, the premiums will be reduced by the amount of the child.

The next thing to consider is how long the mortgage on the house is and college expenses if there are children who are going to attend college. The term of the insurance should, at the least, cover this time frame. This provides a peace of mind to the family member left to pick up the pieces and ensures that a home and education are provided.

Finally, when considering the length of the family term life policy, the cost of the premium must be considered. Term life policies typically have a steady premium that remains constant during the policy life. When the term is up, if the policy does not have a convertible option, a new policy must be applied for and higher premiums paid due to age and health conditions being considerably different. A long family term life insurance plan offers lowers payments for a longer time period and if a convertible option is available the policy is that much better.

How Much Coverage?

Deciding how much coverage to take out can be a hard decision. There are many different schools of though and formulas that are used to come up with a number. The bottom line is each family will have their own comfort zone when it comes to coverage. Some of the things to consider include:

  • Mortgage: The amount owed on the home should be taken into consideration; however, homeowners should also have mortgage life insurance and so this may not be important.
  • College education costs for each child in the family.
  • Lifestyle: Keeping the family in the lifestyle they are accustomed to is important to many people and so they take out enough life insurance to ensure that the money is available to help them maintain their lifestyle for at least one or two years.
  • Outstanding Debts: If the family has excessive credit card debt, auto loans or other debts, these can be taken into consideration as well.

Ultimately, the amount of coverage is a personal decision that must be made by every person based on their circumstances.

Family life insurance is an important component of preparing for unforeseen events that can bring financial ruin. Speak to an agent or get an online quote and protect the family for the unexpected.

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