Purchasing life insurance can be a confusing process. There are many different types of insurance from term to whole life to accidental and more. One type of term life insurance, convertible term life insurance, is a popular choice due to its ability to be converted from a term policy to a whole life policy without incurring any penalties. This guide to convertible term life insurance hopes to break down this insurance and make it easy to understand why it is a good choice.

What Convertible Term Life Insurance Is?

Many young people choose term life insurance as their first life insurance policy simply due to the cost being much lower than many other types of insurance. These polices offer the coverage the family needs at an affordable price. The most popular term life insurance policy for young people is the convertible term life policy.

Convertible term life insurance policies are face value term life insurance policies that have a clause allowing the owner of the policy to convert it to whole-life point any time before the policy ends. This is important when a family starts to mature and wants the solidity and long life that a whole-life policy offers.

Why Whole Life Insurance is Best?

There are many reasons that whole life insurance fares better than term life insurance and these same reason make it advantageous to have a term life insurance policy that can be converted to a whole life insurance policy. These reasons are explained below to help those people who wonder why they should forfeit a term life insurance policy with very low premiums for a whole life insurance policy that could have slightly higher rates.

• Built-in savings: Whole life insurance policies have a built-in savings feature that actually adds to the face value of the insurance policy by allowing part of the premiums to earn interest that is then applied to the face value of the policy.
• Age: Sadly, as people age, the price of insurance policy becomes much higher. This is simply due to the fact that health issues are typically a concern and the chances of death are higher. One way to avoid this is with a convertible term life insurance policy, because the policy is put in place early in life, the cost to convert to whole life is not as expensive as if the policy were brand new.
• Borrowing: Whole life insurance can be borrowed against when there is an emergency need for money. Term life insurance policies do not have this option.
• Steady Premiums: Whole life insurance premiums stay constant throughout life. This is not true of term life policies that have to be renewed after the term is up, which is typically many years later in life when health issues and age will affect the price of the policy.
• Lifetime Coverage: Whole life coverage provides life insurance for the insured’s entire life. Policy premiums typically have to be kept in good standing up until the age of 100 or whatever age is indicated by the policy; however, after that, the policy’s face value is in full force and no premiums are due. Some whole life policies allow the premium to be paid after a certain age by using the interest that has accrued on the policy.
• Tax Deferred: The interest accrued on a whole life policy is tax deferred which is a savings in itself.

These are some of the best reasons for choosing a whole life insurance policy or a term life insurance that has a convertibility option. The policy premiums will increase somewhat when the policy is converted; however, the policy will still be less expensive than trying to get a new whole life policy at an age when premiums are typically very expensive.

Points to Consider

When purchasing a term life insurance policy, there are some points to consider and ask questions about before signing the policy. Some of these are explained here:

• Does the entire policy have to be converted when the term is up? Some convertible term policies allow for a portion of the policy to be converted to whole life with the remainder being left as a term policy.

• What is time-frame the policy has in order to be converted? This is important so that the policy doesn’t completely lapse before a decision is made on converting it. The policy holder may need to re-assess their financial situation and other factors before converting to a whole life policy.

The answer to these questions will be helpful in determining if the policy is right for the family’s financial situation.

Individual’s shopping for term life insurance should take a serious look at convertible term life policies. These policies offer the best of both policies, lower premium rates while the insured is still young with the option to convert to a traditional whole policy at the end of the term.

Have you recently started to think about what would happen to your loved ones if you died? Have you considered the serious financial pressure that your absence would place on your family? Have you considered that your loved ones may need some type of coverage to ensure that, should something happen to you, they aren’t left trying to put the pieces back together without any funds to move forward? If so, you have probably started looking at life insurance policies.

Shopping around for life insurance can be a bit overwhelming, especially if this is your first time looking for life insurance. So many different types of policies exist today and while this helps to ensure that there is a policy for everyone, it does create a great deal of confusion among consumers. To help you in your life insurance purchasing decision, this article will take a look at the two main types of life insurance; permanent life insurance and term life insurance.

Term Life Insurance

Term life insurance allows you to purchase life insurance for a set amount of time. This time frame is often of your choosing and, unless you are choosing short term life insurance, it will be anywhere from one year to thirty-five years. Generally, term life insurance policies are issued in five year intervals, but there are exceptions.

Once you choose the interval for your term life insurance policy, you need to choose other things like your coverage amount and any riders or exclusions you want to place on the policy. In most cases, you will then be required to take a medical exam before you policy can be approved. Once approved, you start to pay your premiums.

As long as you pay your premiums on time, you are covered until the policy term date. At the end of the policy term, you can apply for renewal or conversion of your policy, but all of the funds you have placed towards your premium are lost. This is because, much like renting a car, the money you invest is not placed toward the purchase of the car but for the ability to use the car.

You should also know that there are other benefits to permanent life insurance that you will not receive with a term life insurance policy. One of those benefits is the building of cash value. You will not be able to borrow against your term life insurance policy and you cannot claim it as an asset, since payout will not be disbursed unless you die within the coverage dates.

Permanent Life Insurance

Purchasing permanent life insurance is much like purchasing a car that you will make payments on forever (or until you are 100 years old) but that you will drive until you die. As long as you make your monthly payment, you can drive the car. Of course, this means that you will have to pay a much higher premium, but there are many benefits that make this type of life insurance policy so popular.

Unlike term life insurance policies, your permanent life insurance policy builds cash value. It can be claimed as an asset. It can be borrowed against. It can even be cashed out, should you decide that you want a different type of policy.

Another thing to consider is the fact that, while the premium is much higher, than term life insurance for younger people, the cost of term life insurance goes up every year with age. So when your term life insurance policy terms out in 35 years, you might be shocked to find out how much your new premium will be. You might even find that, had you purchased permanent life insurance when you were younger, the amount you paid out over your life time would have been less, although this is not always the case.

So Which Policy is Right for You?

The right policy for you really depends on you. There is no easy answer to this question and only you can decide for certain. While some investors say that premanent life insurance is the very best option because you don’t lose out on money that you put into a policy and you are building cash value. Others say that the best option is to purchase term life insurance and invest the rest because you will receive a higher return that way.

In the end, you have to consider your current budget, how life will change for you in the future and what your hopes are for the future. While purchasing a term life insurance policy and investing the rest now may seem like a great option, you have to take the future cost of your policy into consideration. And while you may think that permanent life insurance is the way to go, you have to consider whether life changes (like quitting smoking) could actually decrease the amount of your policy premiums in the future.

Most people scoff when they hear the words “affordable” and “health insurance” used in the same sentence simply because it is almost impossible to find affordable health insurance in recent times. However, it is not impossible to find health insurance that can be more affordable than others. The key is making sure that all the research is done and that every possible way of saving on the policy has been included in the quote.

Why Insurance is Skyrocketing?

The number of people who are living without any health insurance has reached astronomical numbers. This puts a great burden on society as many of these uninsured people turn to emergency rooms for their medical treatment and the hospital is left holding the bill. This causes doctors to raise their premiums and the chain reaction begins. Health insurance companies have begun switching their plans from comprehensive coverage such as HMOs and moving towards higher deductible plans and HSAs (health savings accounts). These changes have increased the cost of medical care and left many people unable to afford health insurance and health care. The good news is that there are ways to save money on health insurance and some ways to shop for health insurance that should lead to savings.

Research

Before purchasing any health insurance policy it is important that every possible option is explored. There are websites that will allow for all pertinent information to be entered that will then return multiple health insurance options and the prices for each. Regardless of whether or not the insurance is purchased on line, this is a great way to get an idea of how much the policy will cost.

COBRA

If insurance is available through an employer and the job is suddenly terminated, for whatever reason, the employee has the option of continuing the coverage as long as they pay the monthly premium. This may seem expensive, but when compared to starting a new policy, many people find this a good option.

Increase Deductibles

One of the easiest ways to get a lower quote on health insurance or even reduce the cost of existing health insurance is to increase the deductible. This is the amount of money that is spent out-of-pocket before the insurance kicks in and starts paying. While this may make it slightly more difficult financially if an illness occurs, it will help reduce the cost of the health insurance, making it more affordable for the family to purchase.

Group Health Insurance

This is an option that many people overlook. Any group or club with enough members many be able to qualify for a group discount with a health insurance provider. Every state has different requirements that must be met in order to get group discounts on health insurance; however, it is worth investigating.

Eliminate the Extras

When asking for quotes on health insurance, only pick out those features that will be used. If there are areas of coverage that are not ever going to be used, ask if it will decrease the cost of the policy if they are removed. For example, maternity coverage doesn’t need to be on a policy for someone who is unable to have children and substance abuse coverage doesn’t need to be part of a policy for someone who has no vices.

Current health insurance holders should go over their policy carefully to determine if there are areas of coverage they can eliminate that would help save them money. A qualified insurance agent should be consulted to help check the policy.

Stay Healthy and Vice Free

Insurance companies are in the industry to make money and if they are continually paying medical bills for people they are losing money. This is why they are willing to offer steep discounts to people who are healthy and vice free. During the questioning process of applying for health insurance, the questions will most likely cover things like weight, smoking, drinking and medications that are currently being used.

If the applicant is within their normal weight guidelines with no smoking or drinking habits and they aren’t on any regular medications, chances are good that they will get a much better policy premium than someone who is overweight and has many vices. This is a great incentive to get healthy and stay healthy. Health insurance companies recognize the savings that healthy people offer the industry and use them to balance the amount of money spent out on people who visit the doctor and hospital on a regular basis.

Finding affordable health insurance takes time and some effort on the part of the person who needs the insurance to live a healthy life. It is best to get several quotes and compare the cost and what each one offers before making a decision on one. Health insurance is an important tool that everyone needs to have, particularly as they begin to age.

For some of us, the thought escapes us in the day-to-day life. We forget just how fragile and unstable life can be. In a moment, it can all be over. Have you ever thought about what would happen to your family or your belongings if you died? If not, this could be a good time to start.

Why is Term Life Insurance Important?

Death can happen to anyone at any time. Car accidents, health conditions and accidents at work or at home can happen to anyone of any age. No one is guaranteed a set number of days of life. And whether this idea bothers you much or not, what should bother you is all of the debt that you will leave behind. This debt will have to be paid, even if you die.

Your car payment, your student loan payments, your mortgage, your credit card debt – all of it will now be someone else’s responsibility. That someone will be someone that you love. If you are married, have children, siblings, parents or any other relatives, they will be the ones left responsible for your debt. Your loved ones must also find a way to fund your funeral costs, which can be unbearable, even without the added debt. Life insurance is intended to pay for these expenses so that your loved ones don’t have to.

What is Term Life Insurance?

Term life insurance is a life insurance policy that covers you, in the event of your death, for a predetermined amount of time. You pay a monthly premium for this coverage and your benefits are paid to a beneficiary. Your beneficiary can be anyone of your choosing, but the most common beneficiaries include spouses and children. Once the life insurance policy term is up, you no longer have coverage unless you choose to renew or convert your policy.

Paying Your Premium

In exchange for coverage, you pay a monthly premium for your term life insurance policy. This works much like car insurance or home insurance. The coverage costs you a set amount of money. Several factors and variables are used to determine the amount of your monthly premium and if you fail to pay your premiums, your policy will term or cancel.

Pure Insurance Protection

Term life insurance policies are considered to be “pure insurance protection” policies. Essentially, this means that the policy does not build any type of cash value. Should you choose to terminate the policy any funds that you have placed into your term life insurance policy will be lost. Funds are only released on the policy in the event of your death.

Medical Exams

Medical examinations are generally required to obtain term life insurance policies. Exams are used, in part, to determine the amount of your premiums. During medical examinations, general health and lifestyle habits will be evaluated. Certain medical conditions that can shorten your lifespan, put you at a higher risk for death or lifestyle habits that can cause certain medical conditions, like smoking, can increase the cost of your monthly premium dramatically.

Determining the Term of Your Policy

Term life insurance policies can be set to term anywhere from one year to thirty-five years, depending on your preference. Upon applying for your insurance policy, you can decide the term for coverage. Many policy holders are unsure as to how long of a term they should choose. Some factors to consider when purchasing term life insurance is the age and number of children you have, the amount of income you currently make, the amount of debt you currently have, the length of time you may have any debt obligations like a mortgage or car payment and the duration of any educational expenses for your child or your spouse.

Because premiums are likely to increase each year with age, you will want to try and choose coverage that will keep you insured until all major expenses have been paid. This can be until your children are adults, until your mortgage is set to be paid or until all educational needs will be met. Should you find that you don’t need coverage as long as you had predicted, your policy can be terminated early, but you cannot reduce the amount of new coverage, should you shortchange yourself.

Converting Your Policy

Some life insurance companies will allow you to convert your policy around the term date. You can change to universal or whole life insurance, which will cover you from the start date of the policy until your death. These types of policies are generally more expensive, but they ensure that you have coverage for the entire duration of your life. Budget-wise, they may not be feasible for families, but they may appeal to you later in life when you will have more money to invest in your insurance.

Life insurance is a necessity in today’s world; especially if you have a family. The problem for many people is the cost. Even if you are healthy and young, the costs may be too much to handle in today’s strapped economy.  But, add any type of medical issue, and life insurance costs may be so high you can not even consider it.  Luckily, there are some ways to cut costs and get the coverage you need.

There are a lot of different ways to save on life insurance costs these days. One good option is to consider taking out a renewable term life insurance policy.

The Annual Renewable Plan

One of the best ways to get a term life insurance policy as cheaply as possible is to take out an annual renewable plan.  This is a plan that is offered one year at a time.  The benefits to this type of insurance policy is that the rates generally start out exceptionally low – especially if you are very young when you initiate the coverage, and are reviewed each year to determine whether you are a higher risk and need to pay a higher premium s you grow older..

The dangers of this type of insurance plan is that you may be asked to resubmit medical information each year and even undergo an intensive medical review, complete with a physical and blood work to determine your eligibility.  If you have any changes in your health at all, the rates can quickly skyrocket. Stay healthy though, and you will likely only see a minimal increase.

While a good option for young and healthy consumers, an annual renewable term is usually not the ideal situation for older customers who may face big premium increases as they age and their health becomes more of a concern.

Longer Renewable Plans

Not every renewable term life insurance plan comes up for renewal every year. There are 5 years, 10 year and even 20 year renewable policies being offered within the industry. These too, come with their own sets of pros and cons.

Again, the major downfall of any type for renewable plan is that you must reapply when the term is up. For some people, this may mean either being denied coverage altogether or being charged a lot more for the same coverage they have already had for years. Depending on your personal health status, your premiums can go up a little or go up a lot.  The underwriters may decide to drastically change your policy coverage and overall plan.

Of course, the longer the term, the longer you have before you must reapply. For some people, this is all the time they need to ensure that they can get their children grown and out of the house; pay off their debt; etc., and make other financial plans for their survivors. Others, however, may find it difficult to obtain new coverage when their current policy expires.

Guaranteed Renewable Plans

One way to combat this problem is to spend a few dollars more in monthly premiums and take out a guaranteed renewable term life insurance plan form the beginning. While you may still be forced to pay a much higher premium for the new policy when your current one expires, a guaranteed renewable plan does offer the guarantee that a new policy will be issued by the company if you decide you want one. This can be a very safe option for most consumers; but especially those who anticipate health problems in the future.

Renewable term life insurance plans come in all shapes and sizes. From the annual term to a 20-year term to the guaranteed renewable option, today’s consumer can design just about nay kind of policy they like to best meet their needs and their budget restraints.

Of course, be sure to talk over your options carefully with your insurance agent to make sure that you are indeed getting the right type of coverage at a price that you can afford.

If your employer offers life insurance, you may have considered purchasing a policy. Or maybe you belong to another group that offers life insurance and you wonder if the benefits are worth signing up. You know it will help protect your family, should you pass away. But if you are like most people, you are unsure about the terms used to describe the life insurance policy that your group or employer offers. To help you better understand your group term life insurance policy and what it covers, a list of the most commonly used terms and their definitions can be found below.

What is Group Term Life Insurance?

Probably the most important term to understand is group term life insurance. Without a basic understanding of what it is you are being offered, you may opt out of purchasing this valuable asset. Term life insurance is a life insurance policy that has a set time period for coverage (e.g. 15 years). Group term life insurance is a policy that is offered only to groups, such as employers, at a discounted rate. This is the major benefit of obtaining a life insurance policy through your employer.

Veterans Group Life Insurance

Veteran group life insurance is offered to veterans until after one year and 120 days after their discharge from service. This enables the veteran to carry their life insurance policy from their Service members Group Life Insurance Policy to an individual life insurance policy, while still reserving the military insurance benefits. This type of insurance is a renewable term insurance policy. There is also a big advantage to choosing a veterans group life insurance policy. Unlike other insurance policies that figure in risks like smoking, drinking, age and overall health, veterans group life insurance does not use these factors to calculate your premium. If you have any of these issues in your past or present and still have the ability to take advantage of this opportunity, it would be a very wise decision to do so while you still have a chance.

Yearly Renewable Group Term Life Insurance

Yearly renewable group term life insurance is different than group term life insurance. With this type of life insurance, the policy must be renewed each year. This type of insurance reduced that amount of premiums that are paid by the employer, but it can increase the amount you must pay each year. The most common reason that employers choose this type of coverage is high turnover in the workplace. Once you no longer work with your employer, you no longer have access to their group term life insurance.

Note: Some life insurance companies will allow you to continue your coverage if you agree to pay the full amount for the policy. This amount is usually higher than the amount that you and your employer paid for the policy, but it does prevent a lapse in coverage.

Level Term Policy

A level term policy, unlike a yearly renewable policy, provides protection for a period longer than one year. Level term policies are most commonly offered for 5, 10, 15, 20, 25, 30 or 35 years. If you notice, this type of policy generally works in five year intervals. Some policies will allow you to convert your policy or renew it after the term is up, but there are no guarantees of renewal unless a guaranteed renewal is expressed within your policy.

Accidental Death

Unlike a full term life insurance policy, accidental death policies cover the insured only in the event that death is ruled as an accident. Payout for this type of insurance is very difficult to obtain because there are many exclusions and many families, amongst the pain and agony of dealing with the accident itself, forget to maintain the policy until death actually occurs.

Policy Not Taken (NTO)

This is the term used in your policy documents, should you decide not to accept the insurance offered through your group or your employer.

Death Benefit

The death benefit of your policy is the amount of money (otherwise referred to as face amount) that will be paid to your beneficiary in the event of your death. The beneficiary is named by you and can be anyone that you choose, but the beneficiary will have to provide legal documentation to prove that you have, in fact, died. In most cases, this is done through a death certificate. To change the beneficiary after the policy is initiated, you will have to contact the life insurance company.

Premium

Your life insurance premium is the amount of money that you must pay to maintain the policy. In a group policy, the insured is usually responsible for at least part, if not all of the policy premiums. If responsible for the full premium, you are receiving only the benefit of having a discount on your premiums by signing up under your employer or group.

Before you purchase term life insurance, it is important to know what you are buying. But like most types of contracts, terminology that you are not familiar is often found within the paperwork of your term life insurance policy. At best, this can lead to some misunderstanding about your policy. At worst, this can cause you to completely skip over the specifics of your policy and leave you unprotected or under-protected.

To better help you understand your policy and its specifics, below is a list of the most common direct term life insurance terms and their definitions. But first, you should understand what direct term life insurance is and what it isn’t.

Direct Term Life Insurance:

Insurance is coverage that protects someone from loss. Loss of life is the type of loss that life insurance covers. Term life insurance is a policy that covers the individual for a set period of time (1 year, 5 years, 15 years, 30 years, etc.) Direct term life insurance is a policy that is purchased by the insured (you). This is in direct contrast to a term life insurance policy that is purchased, in whole or in part, by your employer.

Insured:

The insured of a policy is the person that is covered by the policy. Upon the death of the insured, benefits will be paid.

Insurer:

An insurer is the company or party that provides the life insurance policy. They are responsible for paying out benefits, should death of the insured occur during the time of coverage.

Beneficiary:

A beneficiary must be selected for your life insurance policy. This is the person or group of persons that will receive benefits upon your death.

Premium:

The amount of money the insured pays to obtain and maintain the insurance policy. Premiums are generally billed monthly.

Rider:

Life insurance policies are stock-written, meaning that they are written before you even apply for them. Of course, your needs may deviate from the cookie-cutter terms of a pre-written life insurance policy. This is where riders come in. Riders may be offered to you to help you in making your policy more individualized to your needs. Prices are altered based on the type of riders placed on your policy and you must talk to an agent directly to have these placed on your policy.

Policy Lapse/Lapse

A lapse in coverage is a time period in which you are not insured due to nonpayment of the policy premiums. You may be able to reinstate your policy in the event of a lapse, but you may experience higher premiums. You can also be denied coverage or be required to start a new policy in the event of a coverage lapse.

Life Expectancy:

Life expectancy is the length of time that the insured is expected to live. This is figured by using a number of different factors and the results help determine the actual policy premium.

Proof of Loss:

Proof of loss must be provided by the beneficiary before benefits can be received. A valid proof of loss is a legal document, like a death certificate.

Accelerated Death Benefit:

An accelerated death benefit is the payment of benefits before the insured is deceased. This can be either a part of the policy itself or attached as a rider to the policy. Either way, accidental death benefits are only paid in the event that an unexpected, exceptional medical condition occurs (debilitation, coma, severe handicap, etc.) The payout is for accelerated death benefits are intended to help with the care costs of the insured, but the amount paid out is generally only 70 to 80 percent of the amount the policy would have paid upon death of the individual.

Effective Date:

This is the date on which your actual coverage begins. This is different from the policy’s date of issue, even if the dates listed are the same. If death occurs before the effective date, no benefits are paid.

Final Expense Life Insurance:

Final expense life insurance is no different than regular whole or term life insurance, except in the fact that the coverage amount is generally substantially lower than other types of life insurance policies. No medical exam is required to obtain final expense life insurance policies, and because of this, they are most often selected by individuals that have serious health conditions who do not expect to live much longer but have no funds to cover the expenses after death.

Hazardous Activities:

Hazardous activities are any activities that are deemed a risk to the insured’s life (cliff jumping, scuba diving, race car driving, etc.) These activities will increase the premium for the insured and may prevent coverage altogether for some policies.

Yearly Renewable Term:

A yearly renewable term is a term life insurance policy that is renewed at the end of each year. Premiums generally increase each year, but these are often a good type temporary insurance for individuals that are expecting a life change soon that may lower their policy premiums on a longer term life insurance policy.

Most people understand that term life insurance is a certain amount of coverage offered for a set amount of time, for one low price.  When the specific term expires,, the entire insurance policy is null and void and a new one must be issued (for a new, higher premium) in order for the coverage to continue.

By offering a certain price for a short period of time, the company can offer lower premiums in the hope that the insurance will never be used. As the consumer grows older, the amount of insurance is generally decreased, while the premiums increase.

While the entire process may seem to benefit the insurer and not the policy holder (and ti does), the fact still remains that it is a good way for most people to afford the insurance they need; giving both themselves and their families peace of mind.

Many people prefer term life insurance because it offers an inexpensive way to purchase insurance during different seasons in life.  But, did you know that within the term life insurance umbrellas, there are a variety of options to choose from? These options are good at helping consumers design a policy that will work best for them as individuals.

For those who are not familiar with the different types of term life insurance, here is a rundown of some of the most popular options available in today’s marketplace:

The Straight Term Policy

The most popular type of term life policy is called  the straight term.  As it name would imply, the straight term policy is  a basic policy offering a set amount of insurance for a specific amount of time (usually 5, 7, 10, 15 or 20 years).  In the event of the policy holders’ death, the person or persons named as the beneficiaries receives the amount listed on the policy.

The Decreased Term Policy

Another term life insurance policy available today is called the decreased term policy, which lowers the payout amount every year throughout the entire policy term. For instance, your policy may initially offer $500,000 in coverage for the first five years that you hold the policy, with it lowered to $400,000 for the next five years and $300,000 for the remainder of the policy term.

Why would someone agree to this type of policy? For one thing, it is cheaper, which allows the policy holder to have more insurance when they need it the most and less later on for the least amount of money. Plus, as you grow older, your needs for insurance change.  For instance, when your children are young you need more coverage, but as they grow older and leave home, you need less.  In addition, you will likely owe less money are your home after 10-15 years, making less insurance coverage workable for your spouse.

The Shared Term Policy

Do you and your spouse both have a term life insurance policy?  If cost is keeping you both from getting the coverage that you need, then consider a shared policy.  It works like this: you take a single policy for a set amount of money.  It is good for both you and your spouse.  If one of you were to die unrepentantly, the policy will pay just as a normal one would. Keep in mind though, that it only offers one payout. So, if you and your spouse were both to die, in lets say a car accident, your children would only receive one payoff amount – not two.  Another thing to keep in mind is this: once the policy has been used, the surviving spouse will have to get their own policy in order to continue their own personal coverage.

The Annual Renewal Policy

Consumers who are young and healthy can often save big bucks by purchasing a renewable term life policy that increases its premium each calendar year.  While the coverage remains the same, the company ahs the option of increasing your premium due to age and health issues.  Also, they can ask for you to resubmit health information with each renewal which can hike those rates even more.

The Conversion Policy

Some Term Life policies come with a conversion clause, which allows the policy holder to convert their current term life policy into a permanent policy without having to go through the eligibility process again.  This is a nice option to have for those who plan on keeping their policies for the long haul since renewing a term life policy after a few decades, which can be quite expensive.

True, term life insurance offers the easiest and most inexpensive way to get the coverage you need for your family.  Now, with so many additional options available, consumers are not just roped into a certain policy offered by a company, but can choose the type of policy, amounts and even premiums they want and need.

Buying life insurance can be a complicated endeavor if you do not understand the terms used within the industry –and in your policy.  Read your policy over carefully.  Do you understand what it says?  Not sure what all of that mumbo-jumbo means? Here are some of the most common term life insurance terms that you need to know to better understand the coverage you are either considering buying or already have.

Term Life Insurance

Term Life is a type of life insurance which guarantees a set amount of coverage for a set premium price for a certain period of time., For instance, a term policy may offer
$50,000 worth of coverage for $100 a month for 10 years. During that time, your premium costs can not go up; even if you get sick. But, when the ten year term is up, you will need to reapply for a new policy and this can cost you.

Accelerated Death Benefit

This is a benefit offered by some life insurance policies that allows the policyholder to receive the death benefits before an actual death occurs. This is usually offered in cases where death is imminent such as when late stage cancer; AIDS or another malady will take the life of the policyholder within a few months.  The purpose of the accelerated benefit is to give the policyholder the money they need to live out their final days in peace and comfort. Accelerated death benefits are not offered with all policies.

Amendment

An amendment is a  change in the life insurance policy that ahs been agreed to by all parties.

Cash Value

In some instances, a policy may accrue a cash value which can be used in the future. This is usually not offered in term life policies.

Death Benefits

The amount of money the beneficiaries of the policy will receive upon the policyholder’s death.

Double Indemnity

When a policy contains a double indemnity clause, then the insurer must pay twice the amount of the coverage in the event the policyholder dies in an accident.

Effective Date

This is the date in which the policy becomes effective. Should a death occur before this date, the insurer is not legally bound to pay the coverage amount.

Evidence of Insurability

In most cases, insurance companies require proof of health status to approve a life insurance policy.  Such evidence of insurability may include the release of health records; test results; physical exams; blood tests and more.

Face Amount

This is the benefit amount offered by the policy.

Grace Period

This is a short period of time (usually under 31 days) in which the policyholder can pay a late premium and still be covered under the policy.

Guaranteed Acceptance

This is a type of term life insurance which requires no medical review for acceptance.

Lapse

The termination of a life insurance policy due to non payment.

Insurer

The insurer is the company or agent offering the life insurance coverage to the policyholder.

Lump Sum Payment

This allows the insurance company to pay the insurance benefit in a single payment to the beneficiary instead of quarterly or monthly payments.

Permanent Life Insurance Policy

A life insurance policy which is good (and active) throughout the policyholder’s entire lifetime with no need to reapply under any circumstances.

Policy

An agreement between an insurer and an insured that gives the policyholder insurance.

Premium

The amount of money owed to the company for the insurance coverage being requested. In other words “your bill.”

Premium Notice

The “bill” for your insurance coverage.

Renewable Term Life Insurance

A type of life insurance which is renewed annually – usually for a higher premium fee.

Rider

An addition made to a policy to allow certain circumstances to override the actual policy

Surrender

The voluntary termination of an insurance policy for a certain amount of money.

Termination

The cancellation of an insurance policy.

 Underwriting

The process in which an applicant’s risk is evaluated and acceptance and fees are determined.

 Uninsurable Risk

A person who has such a high risk of possible death that they do not qualify for life insurance; even at a higher rate.

Waiver of Premium

An addition to a policy that allows the policyholder to not pay their premium under certain circumstances for a specific amount of time.

As you can see, there are a lot of simple and complicated wordage used in most life insurance policies. Hopefully, these definitions will help you better understand your policy and make it easier to review.  When in doubt, however, always ask for clarification from your agent or representative. Otherwise, you may find yourself paying for a policy that you do not want or even need.

Time is money and few of us have the time or money to waste on the phone contacting countless life insurance agents. Some of us can gather information about different term life insurance companies in bits and pieces. But then there are some of us that continue to put off purchasing term life insurance simply because we think we don’t have the time to shop around, get the best rate or find the right policy or company for our needs…or so we think…

Few people realize just how simple and easy shopping for term life insurance online has become. Today, you can find a plethora of online tools that can help you quickly and easily find the term life insurance company that is just right for you. Whether you need term life insurance with no medical exam or need a policy that will only cover you for a couple of years until you can start your new job, online life insurance shopping is one of the best ways to connect with that perfect company that can help set you up with the policy you’ve been looking for.

Individual Companies

If you have a specific life insurance company in mind, say Aflac, you can contact them directly for a quote online. This, however, removes your ability to shop around, unless you want to do it manually. It also limits your options as to the type of life insurance you get. Sure, Aflac has a ton of options, but what if you need something they don’t have – like maybe an annuity. You might find, through shopping around, that you can find a company that can better suit your needs.

Why Comparison Shopping is Such a Hassle

Just like comparing houses, cars or any other big financial choice, policies start to blur together after a while when you are randomly obtaining insurance quotes. This can be even worse if you aren’t really sure what you are looking for or what you really need. Thankfully, there is a better solution – computer generated online quotes.

What are Computer Generated Online Life Insurance Quotes?

Computer generated quotes have become exceedingly popular – and not just for life insurance but car insurance and house insurance as well. A computer generated online quote will allow you to input your basic information into an online form. The computer generator will then compare your information with some of the best life insurance companies in the country. You are then provided with the specifics of each policy. Only companies that match your needs will be provided. All others will be filtered out.

Where to Find Computer Generated Online Insurance Quotes

There are many different online insurance quote generators. Some of the most popular include sites like Efinancial, QuickQuote, IntelliQuote and AccuQuote. There are, however, several other trusted, reputable sites. Just be sure that you only use reputable sources for your online insurance quotes.

Buyer Beware

Using an online life insurance quote generator may seem harmless, but you are plugging in personal information about yourself and your family. Using a source that is not reputable can lead to fraud or identity theft. If you are ever in question about a specific online insurance quote generator, don’t use it!

How to Choose Your Online Generator

If you have a friend, coworker or family member that has recently used an online generator for their life insurance quote, ask them which one they used. Chances are, you’ll find success with them too. If you do not know anyone that has used this option recently, then go for a generator that is listed above.

You may want to use more than one generator, since prices may vary from one generator to the next. You may also be able to find a better match this way. Just remember, spending too much time searching for your life insurance quote can leave you frazzled and confused. Stick with just a couple of different generators and know that, with any given generator, you have successfully compared your information to dozens of different insurance companies.

What Happens Next?

Once you have found a couple of life insurance companies you are interested in, you have a few options to choose from when it comes to your next step. You can wait for the insurance companies to call you and get more information from the agents directly, you can contact the company or companies directly, or you can go ahead and apply for insurance with the company of your choosing.

There are some pros and cons for each avenue. If you wait for the companies to call you, you may have to deal with some pushy sales agents and you have to wait around for answers, but you do find out first-hand what their customer service is like and you get all of your questions answered. If you contact the agency directly, again, you might have to deal with a pushy agent, but you immediately find the answers to your questions.  If you go ahead and apply for a particular company, you may miss out on a company that would have better met your needs, but you will be covered much faster.