Term Life Insurance

Term Life Insurance provides a specific benefit at the insured's death to the policy's beneficiary. These policies usually do not accumulate cash value.

Characteristics:

• Rates are generally guaranteed and level for terms of 5 to 30 years.
• Coverage is generally simple and cost effective for basic financial protection.
• Most policies can be converted to permanent coverage.
• Conversion features vary and have different restrictions:
• Premium credit may be offered at conversion.
• Conversion may only be available during the level premium period.
• Conversion may only be to a specific permanent policy.

It’s important to match your need with the type of Life Insurance coverage. Some general considerations:

• Why are you purchasing the coverage?
• Replacement of income
• Pay off debt
• Fund for children's education
• Fund for beneficiary's retirement
• Business Buy/Sell Agreement
• Estate creation

• How much coverage do you need?
• One simple calculation usually is 7-10 times your current income.
• Another simple calculation is to take the income needed from a lump sum of money given a particular rate of return. For example, if you need $80,000 annual income and expect an 8 percent rate of return on your investment, you would need a $1 million term policy. ($80,000 / .08 = $1 million)
• PFSI can also run a needs-analysis for your specific situation.

• How long do you need the coverage? 10, 15, 20, 30 years, or longer?
• Will you need coverage after the fixed term? If so, how much?
• What are the financial ratings of the carrier?
• What are the conversion features?
• How competitive are the permanent policies that the term can be converted to?
  

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