Life Insurance - Explained in Simple Terms

Life Insurance

Are you are shopping for life insurance quotes and feeling overwhelmed? Or you have no idea what type of life insurance policy you need? Are you confused by all the different names and acronyms? If you answered Yes to any of these questions do not worry as you are not alone. It seems like everywhere you turn, whether it’s TV, radio or the internet we are constantly bombarded with information about life insurance. Here at Pivot, we strive to make insurance simple. So let’s keep it simple and focus on guaranteed renewable term life insurance which is a common phrase you may be hearing on commercials or reading about online.

1. Let’s focus on the words - Term Life Insurance. Simply put, this policy is temporary. You pay a premium for a life insurance policy for a specified period of time. As examples, this could be 10, 15, 20 or 30 years. If you pass away during the term period you have chosen, the life insurance company will pay the amount of the policy to your beneficiaries. Think of the word “term” in this way: the President of the United States is elected to a 4 year term. At the end of the 4th year, his term comes to an end and he has to run for re-election in order to continue being President. Let’s say you have a ten year term policy. Your policy will come to an end at the end of the 10th year if you do not pass away. (Note: In an upcoming blog I’ll discuss what options you have after a term policy ends.)

2. Now let’s talk about the term - Guaranteed Renewable. At the end of your life insurance policy term period, you may want to renew and the good news is you will be able to do so. Keep in mind you may have a higher premium because you are now 10 years older. This is important as you will have to renew every year and this means your premium will likely increase every year as long as you renew it. In some cases, you can renew term policies up to age 95 (always check your policy for state specific rules on what age you can renew to as outlined in a policy as age guidelines can vary from state to state).

The other benefit to Guaranteed Renewable is that you do not have to go through any health questions or health exams. If you developed a terminal illness during the 10 year term period, at the end of the term you could still renew it and be covered regardless of your health. Again, the premiums could be higher and continue to increase, so it may become very expensive based on your age and how many years you continue to renew the policy.

3. What does the word Level mean? It means that your premium will stay the same for the 10 year term period. It will not increase or decrease during the term. Always make sure that you are making your payments on time, as this will allow you to have continued peace of mind with an in-force policy.

About the author: Dan Cody has been in the life insurance business for over 7 years. He loves playing a variety of instruments including the guitar, bass, drums, and piano. He also supports cancer research foundations and volunteers at local pet shelters. Dan enjoys helping customers understand life insurance, so they can find a solid policy that fits their needs. You can reach Dan at 1-800-651-1953 or DCody@Pivot.com.