TERM LIFE INSURANCE: A GREAT STARTER OR BOOSTER KIT FOR PERMANENT INSURANCE
The Basics. Unlike Permanent (Whole) Life Insurance, a Term Policy is designed to provide temporary protection for a specified period of time such as 10 or 20 years. Because it does not build any cash value savings, term insurance requires a relatively low premium outlay. It is designed for families that have a large insurance need, but a limited current cash flow that prevents them from acquiring a permanent policy. It is also a useful instrument for covering mortgages or other short-term obligations.
However, term insurance becomes increasingly more costly with each renewal as it is reissued at the then attained age. It is exceedingly important that families turn to permanent cash value insurance as soon as is feasible.
A Starter Kit for Young Families. Many young families face incredible financial challenges during their early years. The cost of raising and educating children is increasing exponentially, even as the cost of housing is setting unimaginable record highs. Home and auto insurance costs since the 9/11 disaster have also risen dramatically. Add to this the burdens of paying student loans and caring for elderly parents and it is no wonder that permanent life insurance is considered to be a “luxury”.
Consequently, many young families have no choice but to turn to affordable term life insurance. Although these policies, not unlike rented apartments, do not build equity, they do have abundant value for first-time purchasers.
First and foremost, they provide a considerable death benefit to help to cover the devastation that can result from the premature death of a bread-winner in the family.
Second (provided that they, like Providence’s term policies, are “convertible”), most term policies can be converted at any time to permanent coverage without proof of insurability. If an insured’s health declines during the term of a temporary policy, he or she cannot be punished with added costly premiums or outright denial of permanent insurance. Term insurance is, therefore, an invaluable starter kit.
A Booster Kit for More Mature Families. Once a family establishes permanent policies for its bread-winners, it should strongly consider boosting their death benefits with term insurance. These booster policies can themselves be converted without proof of insurability and can add a wealth of coverage for pending obligations such as mortgages.
Once the principal balance of a mortgage diminishes and/or, for other reasons, the family’s dependence on the bread-winners wanes, the term policies can be eliminated. However, the better alternative is to convert them to permanent insurance as a means of enhancing the family’s estate for future generations. Permanent life insurance is an absolutely fabulous way to leave a legacy for one’s children, so that their financial challenges are not as daunting.
CALL: The Providence Association
Your Branch Secretary or The main office: (toll free) 1.877.857.2284
Employer Insurance Does Not Suffice.
The group coverage that and employer supplies is a series of term policies. It expires along with the job and continues in force at the whim of the employer. Nor is employer coverage ever enough to protect the family. It is imperative that every family view term and employer insurance as a temporary stop gap for eventual investment in permanent insurance. The earlier the conversion is made, the greater will be the premium savings and cash values in later years.
TRUST IN PROVIDENCE FOR YOUR INSURANCE NEEDS