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The Life Insurance Blog

Helping millions of Americans become educated
in making decisions about their life insurance needs


Term Life Insurance: What It Is. What It Isn’t.

Feb 13, 2015 4:30:00 PM

what_it_is_what_it_isntWe want to set the record straight.

We understand that the words ‘term life insurance’ can conjure up a lot of assumptions and puzzled looks. At IntelliQuote, we’re in the business of creating clarity, so for today’s post, we’ve decided to share a quick guide to highlight what term life insurance is and isn’t in order to squash any misconceptions floating around.

Term Life Insurance - What it isn’t:

1) A magic pot of gold: Who doesn’t want extra money? The idea of borrowing money (tax-free) against an insurance policy sounds tempting, even to the most conservative spender, but unlike permanent insurance, term life insurance has no cash value. With term life insurance, your coverage is valid over a certain time period, and payout takes place if the inevitable occurs within this time frame. You also have the flexibility to change beneficiaries.

2) Asset protection: Are you looking to keep the cash value of your policy and death benefits under the radar of creditors? If this is the case, then a term life policy won’t help, but a permanent life policy may be an option.

3) Guaranteed lifetime protection: The premise behind term life insurance is that it’s good for a predetermined amount of time which you set in advance. If you pass on during this time period, the policy will pay out at the time of your death. However, term life insurance does not offer you level premium protection after the guarantee period.

Term Life Insurance - What it is:

1) Uncomplicated (relatively): One of the biggest assumptions people make when it comes to life insurance is that it’s complicated. Term life insurance, on the other hand, is pretty straightforward: you assess your current expenses, and these expenses (along with other factors) determine what your coverage should be. Of course, a knowledgeable advisor will ask you the right questions to get a true sense of your total costs. An added perk is the simplicity allows for easier comparison shopping for you.

2) Protection for your family for less: Does the idea of premiums dredge up images of steep monthly payments? You can rest assure that term life insurance is one of the most affordable ways to protect your family from life’s unexpected twists and turns.

3) Option to convert later: The above example discussed the affordability of life insurance. But what if you want an insurance policy with a cash value down the road to supplement your income or to have a lifetime of coverage? A term life policy with a conversion privilege gives you the option to convert to permanent life insurance at a later date.

We hope this scoop on what term life insurance is and what it isn’t will help keep you in the loop, because at IntelliQuote, we believe that a well-informed customer is a lifetime customer.

Curious to know more about how term life insurance can fit into your life? Head on over to our quotes page and start your journey today.