Q. What are the features I need to pay attention to when I compare different Term life products from different insurance companies?
A. If you want to make some thorough analysis and comparisons of different Term life products, you can consider the following factors. But in the end, Term life is a commodity nowadays, at the same credit rating level, you just need to get the lowest priced Term life product!
Company Financial Strength - Not all life insurance companies are the same. Some are very large financially, some are small. Some companies are in better financial condition than others. The longer the level term period, the more important it is to consider how healthy and strong the life insurance company is. Make sure that you get information about the financial ratings for the companies that you are considering.
Premium Guarantees - Are the premiums for the policy fully guaranteed? Not all companies fully guarantee the initial premium for the entire level period. If two products have the same price, but one is guaranteed while the other is not, the guaranteed product would be better.
Renewal Period - Most level term policies have the ability to renew the policy beyond the initial level premium period. Two products may offer identical premiums for the initial level period, and yet there may be an enormous difference in renewal costs beyond the level period. No Lapse U/L products have term-like premiums which offer initial guaranteed level premiums comparable to the level periods of corresponding guaranteed level term policies. For the initial level period, U/L policies with term-like guaranteed premiums provide comparable premium/death benefits as the corresponding level term products. However, the ability to renew those U/L policies, and the premiums that you might pay to renew those policies, can differ significantly from a corresponding level premium term policy.
Conversion Period - Many term policies offer the ability to exchange the term policy for a whole life policy without having to again medically qualify. Should your health change, and should you not be able to buy a new policy elsewhere, you may find the conversion option important. Not all policies offer the same time period for conversion to take place, and not all give you access to the same types of whole life.
Comparing Different Level Periods - Should you be buying a 10 year term product, a 20 year term or a 30 year term? How long do you need the insurance? If you buy a 10 year term, how will future cost increases after the 10th year compare to a longer level term plan such as 20 year term? If you only need insurance for 10 years, you could be wasting your money buying a 20 year term product. You should discuss why you are buying the insurance with your agent and let them give you the benefit of their knowledge and experience.
Monthly Payment Options - Many consumers pay their term insurance premiums on a monthly basis. The least expensive product based upon the annual premium may not have the lowest monthly, quarterly or semi-annual premium. Many life insurance companies charge extra to pay more frequently than annually, and some charge more than others.
Health Risk Conditions - Each life insurance company establishes its own health and lifestyle requirements to determine what premiums you may qualify for. Slightly high blood pressure may disqualify you for one company's preferred health premium, but might be acceptable to obtain another company's preferred health premium.
Smoking Considerations - Not all life companies define smoking the same way. If you have never smoked or used tobacco products in any way, then a non-smoking comparison will include products that you can qualify for based upon non-smoking. If you were a smoker and later quit, then how long ago that you quit may limit your choices. If you do smoke, some companies may offer products with better premiums depending on how little you smoke, or whether you smoke cigars or pipe rather than cigarettes.
A. If you want to make some thorough analysis and comparisons of different Term life products, you can consider the following factors. But in the end, Term life is a commodity nowadays, at the same credit rating level, you just need to get the lowest priced Term life product!
Company Financial Strength - Not all life insurance companies are the same. Some are very large financially, some are small. Some companies are in better financial condition than others. The longer the level term period, the more important it is to consider how healthy and strong the life insurance company is. Make sure that you get information about the financial ratings for the companies that you are considering.
Premium Guarantees - Are the premiums for the policy fully guaranteed? Not all companies fully guarantee the initial premium for the entire level period. If two products have the same price, but one is guaranteed while the other is not, the guaranteed product would be better.
Renewal Period - Most level term policies have the ability to renew the policy beyond the initial level premium period. Two products may offer identical premiums for the initial level period, and yet there may be an enormous difference in renewal costs beyond the level period. No Lapse U/L products have term-like premiums which offer initial guaranteed level premiums comparable to the level periods of corresponding guaranteed level term policies. For the initial level period, U/L policies with term-like guaranteed premiums provide comparable premium/death benefits as the corresponding level term products. However, the ability to renew those U/L policies, and the premiums that you might pay to renew those policies, can differ significantly from a corresponding level premium term policy.
Conversion Period - Many term policies offer the ability to exchange the term policy for a whole life policy without having to again medically qualify. Should your health change, and should you not be able to buy a new policy elsewhere, you may find the conversion option important. Not all policies offer the same time period for conversion to take place, and not all give you access to the same types of whole life.
Comparing Different Level Periods - Should you be buying a 10 year term product, a 20 year term or a 30 year term? How long do you need the insurance? If you buy a 10 year term, how will future cost increases after the 10th year compare to a longer level term plan such as 20 year term? If you only need insurance for 10 years, you could be wasting your money buying a 20 year term product. You should discuss why you are buying the insurance with your agent and let them give you the benefit of their knowledge and experience.
Monthly Payment Options - Many consumers pay their term insurance premiums on a monthly basis. The least expensive product based upon the annual premium may not have the lowest monthly, quarterly or semi-annual premium. Many life insurance companies charge extra to pay more frequently than annually, and some charge more than others.
Health Risk Conditions - Each life insurance company establishes its own health and lifestyle requirements to determine what premiums you may qualify for. Slightly high blood pressure may disqualify you for one company's preferred health premium, but might be acceptable to obtain another company's preferred health premium.
Smoking Considerations - Not all life companies define smoking the same way. If you have never smoked or used tobacco products in any way, then a non-smoking comparison will include products that you can qualify for based upon non-smoking. If you were a smoker and later quit, then how long ago that you quit may limit your choices. If you do smoke, some companies may offer products with better premiums depending on how little you smoke, or whether you smoke cigars or pipe rather than cigarettes.
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