5 year term life insurance has been around in insurance
circles for a very long time. It can be sold as a policy or as a
rider to a permanent life insurance policy. It was never
promoted much by life insurance agents perhaps because of it's
extremely low premium which results in a very low commission.
Another possibility is that 5 years is a very short period of
time for a life insurance policy.
Why 5 Year Term Life Insurance
5 year term life does have it's place in the portfolios of many
life insurance buyers and can fulfill a very important need. If
you have a short term need for life insurance then this type of
insurance may be for you. If you find it necessary to take out a
loan for a short period of time a five year term policy on your
life can assure the lender that if you should die before the
loan is repaid they will get back their money. Certainly that is
a good reason to buy this type of insurance. You may take the
loan to pay for a college education either for yourself or a
child or grandchild.
The face amount of the 5 year term policy remains level for the
duration and so does the premium. Even though it is initially
taken out for 5 years some companies allow you to continue
beyond the initial 5 year period at a higher premium. The death
benefit is more often than not free of income taxes. You may
convert your policy to permanent insurance in the future.
Waiver Of Premium Rider
It may be wise to add a waiver of premium rider to your 5 year
term life insurance policy. If you should become disabled,
anytime after 6 months of disability, the life insurance company
will take over the payment of your premiums for you, even if it
is for the rest of your life. Think about it for a moment. Do
you realize that people become temporarily disabled an average
of about 5 times during their lifetimes. If you become disabled
for at least 6 months with most companies they will pay your 5
year term life insurance premium for you. Now isn't that amazing.
Accidental Death Benefit Or Double Indemnity Rider
The famous double indemnity rider can also be attached to your
policy. If you should die in an accident the life insurance
company will pay to your beneficiary twice the face amount. Let
us suppose you bought a $500,000 5 year term policy with one
unit of accidental death benefit for each $1,000 of your policy
and you died in an accident. The life insurance company would
pay $1,000,000 to your family. That would be just beautiful,
wouldn't it?
About the author:
For more than 40 years Donald has been known for his extensive
knowledge of the life insurance business. He has represented
some of the largest and best life insurance companies in the
United States as well as Canada. His advice is invaluable.
Donald's website is:
http://www.lifeinsurancehub.net
