Term Insurance - An Expat Option
Term insurance provides protection for a specific period of time. It pays a benefit only if you die during the specified term of the policy. Some term policies can be renewed when you reach the end of the initial coverage period, which can be from 1 to 30 years
Convertibility is another feature to keep in mind with term products. This option allows you to convert the term coverage to a permanent type policy without showing evidence of insurability, up to a predetermined age. Each company has different limits and guidelines for renewability and convertibility.
Most term life is issued as "level-term" meaning that the premiums are constant for the period of the insurance contract.
- Initial premiums are lower than those of permanent insurance, allowing you to buy more coverage at a younger age, when the need is the greatest.
- Good for a specific need that disappears over time, such as a mortgage, children's education costs, or an automobile loan.
- Policy proceeds pass to the beneficiary tax-free.
- There is no buildup of cash value.
- Has a finite term that the policy is in-force.
- Premiums rise as you grow older.
- Coverage may terminate at the end of the term period or may become too expensive to continue coverage.
Why Buy Term Insurance?
Term insurance premiums are at all-time lows!
Because of advances in technology the insurance industry has been able to underwrite each case with much greater accuracy and efficiency. This, along with increasing competition for term products has brought average premiums down dramatically over the last 15 years. Today it is more affordable than ever before to purchase adequate amounts of life insurance. A recent survey by L.I.F.E. discovered that over 40% of American households feel that they have less than adequate insurance coverage.
Longer guarantee periods!
Recently life insurance companies have added guaranteed premium periods up to 30 years for certain age groups. In the recent past, the longest term available was 10 or 20 years. The longer guaranteed term periods mean that your low rates could be locked in for even longer periods of time.
Most term life products are convertible to permanent insurance at a later date!
One thing to keep in mind when purchasing term life insurance is the convertibility of the product. Because your insurance needs and finances change over time, being able to convert a term policy to a permanent type of insurance is very important. This allows you to get permanent life coverage without the need for a physical examination or evidence of insurability. While all companies have their own specific convertibility periods, most allow you to convert to a permanent type of insurance up until the ages of 55-70.
Because insurance rates can increase as you grow older, and your health can affect your insurance premiums dramatically, it is to your benefit to lock in a lower rate at a younger age. Upon conversion to an already more expensive permanent type life insurance, you are rated based on your original policy, not your health at the time of conversion.