Fidelity Life: Term Life Insurance Buyer's Guide for 2022

The COVID-19 pandemic has brought financial security into sharp focus for many families. As a result, interest in life insurance shot up as people sought to provide some financial certainty in uncertain times. Term life insurance, always a popular choice because of its simplicity and affordability, became a go-to choice for many life insurance shoppers this year.

Term life insurance is great for families with children and people who don't want to pass large debts on to others. Here are the steps for getting a policy, including comparing insurance providers, choosing a term life policy type, and evaluating financial needs. 

Shop around

Features and benefits included in term life insurance policies can vary by insurance provider. People will want to shop around for the coverage and benefits that best fit their budget and needs. Life insurance shoppers might want to inquire if a provider offers living benefits, which can allow an insured person to access their death benefit if they become severely ill. The money can be used to help pay off medical expenses and other costs. Some insurance providers will offer renewable term life insurance. This allows a policyholder to renew the policy once the term period runs out. The policy will renew at a higher price, but does not require requalification or another medical exam.  

There may be times where it's more beneficial for a policyholder to switch a term policy to a permanent policy. If life insurance shoppers are looking for this option, they may want to find an insurance provider that allows conversion and determine the conversion period. It's also important to compare premium costs that different providers offer for term life policies. Individuals can get multiple quotes from life insurance companies through an agent or online insurance marketplace. They should compare policies equally by looking at ones that offer the same term length, coverage amount, and other specific features desired. 

Don't wait too long

It's a good idea for policyholders to buy life insurance when they are younger and healthier so they can lock in a more affordable rate. This is because insurers base a policyholder's premiums on factors like their age and health.

Buy a sufficient coverage amount and length

A few different types of term life policies include level term life insurance, annual renewable term life insurance, decreasing term life insurance, and return of premium term life insurance:

• Level-term life insurance is the most common type of term policy that has the same death benefit and premiums throughout the term. It's ideal for those who want a consistent long-term option.
• An annual renewable term policy provides guaranteed coverage that renews every year without a policyholder having to reapply. It's ideal for those needing a short-term option, but it should be noted that premiums may increase each year with these policies.
• Decreasing term life insurance has a consistent premium cost, but the death benefit decreases over time. An example of this type of life insurance is mortgage life insurance. The payout is connected to the declining balance of a mortgage, with the beneficiary being the mortgage lender. This policy can benefit those looking to cover a specific debt, like a mortgage or other loans. 
• Return of premium term life insurance is a policy that will refund any premiums paid if a policyholder outlives the policy. While it's more expensive than traditional term life policies, it can be helpful for life insurance shoppers wanting to be more disciplined in saving. 

The bottom line

All life insurance shoppers ultimately must evaluate their personal financial needs to choose a policy that suits them. For example, a couple with young children may want a long-term life insurance policy with a large coverage amount. In contrast, an older individual may want a shorter-term life policy. Consider the checklist below when deciding on what term life policy to buy. 

✔ Decide how much coverage one needs

✔ Pick a term length

✔ Ask for a no-exam life insurance option if preferred

✔ Finally, don't forget to shop around

For all media inquiries, contact: 

Laura Zimmerman, Chief Marketing Officer

laura.zimmerman@fidelitylife.com, (312) 288-0068

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