by Jayson Cohen, American Legacy Solutions
At the core of Life insurance, the most basic feature is to pay a death Benefit: they lump sum payment your beneficiaries would receive if you were to die. It’s the Core reason to own life insurance – but not the only one. Some types of life insurance offer riders or other built in features that can play an important role in your financial strategy, such as the ability to accumulate cash value that grows over time.
Term insurance as most of us know it, provides life insurance protection for a specific period of time – the “term” – and is designed for temporary circumstances. It makes the most sense when your need for coverage will disappear at some point, such as when your children graduate from college or when debt (such as mortgage) is paid off. The most common term provide coverage for 20 years, but they can run the gamut from one-year policies to 30 years or even longer. In some cases, a term policy can even be converted to a permanent policy. Typically, term insurance offers the greatest amount of coverage for the lowest initial premium and is good for people on tight budgets.
Let’s take a look at what the difference is between the “OLD term and NEW term”. Simply put, Old Term will pay out a death Benefit if you pass during the specific time period chosen and premiums have been paid. Some of these polices may include a Terminal Illness rider that will allow you access to a portion of the Death benefit while you are living if you are diagnosed with a Terminal illness and have less than six to twelve months to live. Any money taken will reduce the death benefit to the family upon your passing.
“New Term” on the other hand have the same features of its predecessor, with some additional benefits. It will still provide a death benefit during the time period chosen as long as premiums have been paid. It will still include the terminal illness benefits mentioned under old term, but may include two additional features that old term does not. Most will include a critical Illness rider, this rider will allow you access to your death benefit if you have a major illness such as, a Heart Attack, Stoke, TIA, Cancer, and some other depending of the company and benefits of the policy. They may also include a Chronic Illness rider that will allow access to your Death Benefit if you need help with two activities of daily living, which consist of Bathing, Continence, Dressing, Eating, Toileting, and Transferring. It may also start to pay if you get diagnosed with a cognitive impairment such Alzheimer’s or Dementia.
As you compare new coverage or do reviews of existing coverage make sure that you take into account some of the new options that you have available to you in the market place. Since not all companies are offering “New Term” or as sometimes referred to “Life insurance for the Living” make sure that you sit with an agent that represents multiple companies and works for your benefit.