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[T159]Term Life Insurance Plan

by Dennis Jarvis, Den

So you're going through the wonderful process of completing an individual/family health insurance application and you come to an option for term life insurance. There's a tendency to just mark yes to avoid the hassles of another application and to stop the nagging inner-voice that tells you to get life insurance. Let's take a look and see if selecting life insurance through your health insurance carrier makes sense.

The information here reflects individual/family health insurance. If term life insurance is offered through you employer, we have provided more information at our individual versus group life insurance article.

A trend over the last decade or so is for health insurance carriers to offer term life insurance as an option. The coverage usually comes in smaller amounts than what you can find through our term life insurance quoting engine. The usually amounts might look something like $15K, $30K or $50K. Rarely will you find amounts that are higher for individual/family health coverage. The benefit of jointly applying for term life insurance through health insurance is that it's all one application...one which you're competing any way for the health coverage. It's this simplicity that encourages most people to just mark "yes" next to this term life option. There's a real cost to doing this so let's investigate further.

The key point with life insurance is cost per dollar of coverage. If you really want life insurance protection then buying your own term life insurance plan will be the much better value. Let's take an actual example of a 30 year male in California. Through our quoting engine the average rate for 10 years of $50K term life is $6/monthly. Through a major health insurance carrier, the term life rate would be $11. That's almost double for the cost per dollar of term life insurance. You are going to pay significantly for the convenience factor. This is only half the story. With a stand-alone life insurance policy, your rate is locked in based on the age at the time of enrollment. With life through your health plan, the rate may increase as you get older and we know that age significantly affects your term life rate.

Another key point with life insurance through your health carrier is that it may be dependent on you keeping the health coverage in force. If you cancel the health coverage, you may not be able to keep the life insurance and that defeats the purpose of life insurance to begin with. People are constantly going in and out of the job market. The other more important issue is the amount of life insurance you are able to purchase. $50K will not address most life insurance needs. As we discussed in our related article, most life insurance needs revolve around income replacement over long periods of time and $50K will only go so far. This amount is more likely suitable for final expense issues such as funeral costs, debts incurred, taxes, and estate settlement. In order to have larger amounts, you're better off purchasing your own term life policy which you can keep regardless of the status of your health coverage.

As you can probably guess from its name, term life insurance policies last for a certain period of time that is known as the term of the policy. during the term of the plan the planholder is required to pay premiums regularly and, in the case of the death of the policyholder during the term, the sum assured under the policy is paid to the nominee. As the plan is taken out for a specified time period it lapses as soon as the time period ends.

There are several reasons for selecting term life insurance when there are several other options available. Term insurances are normally chosen for a specific situation and for a particular reason as well. You might often take into account an exceptional expense or large payment to be made after some time for which you take out a term insurance plan.

When you cannot arrange a plan for a sufficiently long time period for which premiums would be high then you may consider taking out a series of term plans each covering a relatively small timeframe where the premiums are affordable. You can thus take out term plans as you go along to match your pocket book.

You might for instance think about take out a term policy to ensure your child's education expenses which you will need to meet in ten years. For that circumstance you might take out a term plan for say 7 to 10 years. This time period would suit you because you have a specific expense in mind which you need to take care of and this is a policy which is pocket book friendly.

Usually younger people take term policies as because premiums are not high in comparison to other policies. Because you are young you may not have the money necessary to take out other policies but you still need to protect your dependents and so do so through the medium of a term policy. It is ideal in these situations because it is low-priced at a time in life when your income is comparatively low but can nevertheless provide you with a high degree of protection for your family.

None of us wish to think that we will need life insurance and when you are young it doesn't generally feature very highly on your list of priorities. Nonetheless, when you consider the number of people who die each year at very young ages from either accident or disease can you really afford not to find the quite small premium necessary to ensure the future security of those people who are closest to your heart?

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Both Dennis Jarvis & William Hazelhurst are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Dennis Jarvis has sinced written about articles on various topics from Finances, Business and Finance and Finances. Dennis Jarvis is a licensed insurance agent concentrating on . Shop, compare, and instantly quote multiple carriers with professional guida. Dennis Jarvis's top article generates over 40500 views. to your Favourites.

William Hazelhurst has sinced written about articles on various topics from Recreation and Sports, Hobbies for the Family and Medical Insurance. Get a free and no-obligation today and surprise yourself with just how inexpensive. William Hazelhurst's top article generates over 49500 views. to your Favourites.