While most term life insurance is temporary, there are now policies that have level term “like” rates with lifetime guarantees. These policies “marry” the strengths of level term life insurance and traditional whole life insurance providing low cost long term protection.
How Does Lifetime Guaranteed Term Life Insurance Work?
Lifetime term provides a fixed life insurance amount at a guaranteed rate for your entire life as long as you pay your premiums on time. It offers cost effective rates like level term life but also offers the long term death benefit guarantees associated with whole life insurance. Lifetime term is actually a universal life policy with a guaranteed premium and death benefit for your lifetime. As with many universal life plans, a small cash value may accumulate over time. However, cash value growth is not an objective of this insurance. The main purpose of lifetime guaranteed term insurance is to “lock in” a low guaranteed rate that can never be increased. As long as required premiums are maintained, the policy will remain in effect for your whole life.
Guaranteed Insurance Coverage for Your Lifetime
Lifetime guaranteed term and universal life policies have effectively bridged the gap between term life and whole life insurance. Term life has the advantage of being really inexpensive over a certain time period. However, the main problem with term insurance is that rates eventually increase and coverage becomes cost prohibitive. Unlike term life, whole life is designed to last forever. However, it is extremely costly and in many cases you cannot buy adequate amounts of coverage because of the excessive price. With lifetime term, you can get long term death benefit guarantees normally associated with whole life insurance at a price that more closely resembles level term insurance.
Lifetime guaranteed term insurance is the most cost effective policy when the goal is to maintain coverage for life. The best way to buy it is to limit the cash accumulation and pay the minimum premium to guarantee the insurance.
Dial-in Guaranteed Term Life Insurance and Universal Life
Some lifetime guaranteed policies can be designed to provide a “shorter” guaranteed period of your choice at a lower premium. These “dial-in” guaranteed term policies allow you to further reduce your costs by accepting a shorter guaranteed policy but still exceed the age limits of level term insurance and in many cases extend out beyond your life expectancy.
Dial-in guaranteed policies are extremely effective if you are between the ages of 60-80. The reason is that most life insurance companies have age limits for level term insurance. For example, if you are 75, most insurance companies will not write you a 20-year level term policy because of your age. With a dial-in guaranteed term policy, you can pay a premium that will guarantee coverage to a certain age (95 for example) without paying the full premium to guaranteed coverage for your lifetime.
Paid Up Universal Life
Another great advantage of lifetime guaranteed term is the ability to “pay-up” the policy so that coverage is guaranteed but no future premiums are required. The concept is simple, pay a little more for a specified number of years and you can stop paying premiums once the guarantees are satisfied. This is NOT the same as a whole life policy that offers a projected point in time when premiums MAY be discontinued subject to certain dividends or interest assumptions. With paid-up universal life, you can essentially determine how long you want to pay premiums (say 10 years) and pay the extra rate to guarantee the insurance with no future premiums after that time.
Why Buy Term Insurance for Your Lifetime?
The main reason to buy term insurance for your lifetime is for the guaranteed protection at affordable rates. If you have long term needs for life insurance that cannot be satisfied with traditional level term insurance and have to desire to pay extra for the opportunity to accumulate cash value, lifetime guaranteed insurance is the perfect solution. In fact, you can buy significantly more coverage if you consider term insurance for life versus ordinary whole life insurance. If building equity is not an objective, lifetime guaranteed term likely makes the most sense. Some ideal uses for lifetime term include estate tax planning and business succession planning.
Lifetime guaranteed term, commonly known as guaranteed universal life insurance, combines the most attractive features of term and whole life insurance. It offers low rates associated with level term insurance while providing long term coverage guarantees like whole life. It is a great way to protect long term needs that are permanent and cannot be met with level term insurance. For more details or for a personalized life time guaranteed term quote, call MEG Financial today at (877) 583-3955.