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Term Life Insurance

Term Life Insurance

Term Life Insurance

As the name implies, term insurance provides protection for a specific period of time and generally pays a benefit only if you die during the "term" to which the policy applies. Term periods typically range from one year to 30 years, with 20 years being the most common term. Patriot Life Insurance offers 10, 20 and 30 year term products.

Term Insurance Advantages

One of the biggest advantages of term insurance is its lower initial cost in comparison to permanent insurance. Why is it cheaper when initially purchased? Because with term insurance, you're generally just paying for the death benefit, which is the lump sum payment your beneficiaries will receive if you die during the term of the policy. With most permanent policies, your premiums help fund the death benefit and can accumulate cash value.

Term insurance is often a good choice for people in their family-formation years, particularly if they're on a tight budget, because it allows them to buy high levels of coverage when the need for protection is often greatest. Term insurance is also a good option for covering needs that will disappear in time. For instance, if paying for college is a major financial concern but you're pretty sure you won't need life insurance coverage after the kids graduate, then it might make sense to buy a term policy that covers needs through the college years.

When the Term Ends

But what happens if you buy a term policy only to realize you have a need for permanent insurance beyond the level term of the policy? All Patriot Life term policies are “Renewable and Convertible.” The Renewable feature means that after the level premium period of the policy ends, the policy continues to renew at a new premium each year until age 95. This provides for coverage, but the premium increase is substantial. The Convertible feature provides that prior to age 70, without any further evidence of insurability (no additional medical exams or even health questions), you can “convert” the policy to a Whole Life policy that provides level insurance protection for level premiums during your lifetime. Please see our Whole Life policy section for more information regarding the Whole Life type of insurance.

So if you are considering a term policy, make sure you consider how long you’ll need the coverage and make sure the policy you consider has fair terms that allow for your possible changing needs for insurance over the course of your lifetime. If you’re pretty sure your needs are temporary, the term insurance is probably the right choice.

To better understand term insurance, consider this analogy. When you purchase term insurance, it's sort of like renting a house. When you rent, you get the full and immediate use of the house and all that goes with it, but only for as long as you continue paying rent. As soon as your lease expires, you must leave. Even if you rented the house for 30 years, you have no "equity" or value that belongs to you.