Term Life Policies
A policy purchased for a specific period of time that pays a death benefit out only if the insured passes away during that period. The death benefit is paid out to the named beneficiary.
Types:
Level term - a policy where both premium payment and death benefit remains fixed for the entire time.
Uses: Primarily to replace a lost income
However, A ladder of level term policies can simulate a decreasing term policy.
Increasing Term - a policy where both premium payment and death benefit increase from start to finish
Uses: To increase the death benefit steadily to keep up with inflation
Nowadays, these types of policies are mostly phased out and outdated
Decreasing Term - a policy where both the premium payment and death benefit decrease from start to finish
Uses: To cover a debt or a future purchase that will be eventually be fully funded by the insured.
Popular Riders:
Return of Premium - the most expensive rider. If insured outlives the policy, the insurer has to return all premium payments.
Waiver of Premium - If the insured is disabled or is unable to work, future premiums are waived.
Critical/Terminal Illness - Pays out a lump-sum cash benefit if insured is diagnosed with a severe, qualifying illness
Guaranteed Insurability Rider - Gives you the option to buy additional coverage at specific life events (like a marriage or the birth of a child) without undergoing a new medical exam
Accidental Death Benefit Rider - Provides an additional payout to beneficiaries if death is caused by an accident. Extremely strict definition on what is an accident.
