What Is the Difference Between Term Life Policies

What Is the Difference Between Term Life Policies

Is it just Price?

A common question we hear when talking to people about life insurance is “what’s the difference between term life insurance policies?” The answer is: living benefits & convertibility options. Our term life insurance quoting system at pacificinsurancegroup.com will generate a free instant life insurance quote without requiring personal information but typically when people request an application it is always for the cheapest life insurance quote. Then when we call the person interested in life insurance and we ask them “why did you select XYZ company?” The answer is usually, “I don’t know what I was doing I just picked the cheapest one.”

There are major differences between term life insurance plans. Some policies have living benefit riders which can be accessed in the case of a terminal, chronic, or critical illness, which can be a huge deal if someone has a qualifying illness but they do not die. Since term life insurance is designed to provide temporary coverage over a ten, twenty, or thirty-year term period where chances of having a heart attack or getting cancer is a lot more likely than a premature death. People who do not know any better can literally pay $2 more per month and have a term life insurance policy that accelerates almost the entire death benefit while they are still alive in the event of a qualifying illness versusa policy that is cheaper and does not have accelerated benefits.

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A common example might be someone looking to purchase new tires. Do you walk into a tire store and say “give me the cheapest tires”? Or would you rather have much better tires for few bucks extra? If someone does not care about living benefit for some reason then going with the lowest cost life insurance policy is fine, but 99% of the time after explaining the living benefit options people choose to pay few dollars more per month. It is not a ploy for life insurance agent to try to charge you more. It is wise to work with a knowledgeable, independent life insurance agent who knows the marketplace of accelerated living benefit riders available on life insurance policies. If a life insurance agent is basing their recommendation solely on the cheapest price, they are probably not very good at their job.

Another major differentiator is convertibility of the term life insurance policy. This may not sound like a big deal, but ask the 55-year-old person who just had a heart attack or battle with cancer and they are now UNINSURABLE. Generally, if that person went with the cheapest term policy, the convertibility options are terrible.  Often the cheapest term policy is only convertible to an awful, high cost, no extra benefits permanent or whole life policy.  By paying almost the exact same cost, but with a company that lets you switch to their best, low cost permanent policy, the client has given themselves far more flexibility in the long run. Again, work with a knowledgeable, independent insurance agent who understands term life convertibility options. If you can pay a few dollars more per month for a policy that has better convertibility options… it is a no brainer. Moreover, a term life insurance policy with living benefits and good convertibility options is almost always the best way to go. Please take a moment to determine the correct amount of life insurance you should have and reach out to someone on the Pacific Insurance Group team.

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