Term Life Insurance Coverage
Term Life Insurance is just what it sounds like: a policy that will remain in effect for a specific term or length of time. Term Life policies do not accumulate a cash value and pay out only if the insured dies while the policy is in effect.
American Family Life Insurance Company offers three different Term Life Insurance policies: 10-year, 20-year and 30-year. These are level term policies, which means that the premiums (the amount you pay to keep your coverage in effect) and coverage amount (the amount your beneficiaries will receive upon your death) stay the same for the term you choose.
How Term Life Insurance Works
If you have Term Life Insurance coverage, you’ll pay a premium in regular intervals — for example, monthly or annual installments. Your coverage will remain in effect for the specified number of years and the death benefit will be paid in the event that the policy is active when the insured passes away.*
Death benefit proceeds may be distributed in a variety of ways. Most beneficiaries elect to receive the death benefit in a lump sum. Other settlement options, including the ability to disperse the death benefit in installments over a set period of time, also exist.
If the initial term of the policy comes to an end, the policy may be renewed. However, it is important to note that the renewal premium will be higher than premiums during the initial policy term.
As an additional benefit, the policy owner may have the option to convert a term policy to a permanent life insurance policy*, during a specified period, without answering additional medical questions or undergoing a new medical exam. Life insurance needs may change over time, so this conversion benefit can be a great option for evolving needs.
Term vs. Whole Life Insurance
A term life policy lasts for a specific number of years, while whole life insurance covers you for your entire life.* Though comparatively more expensive, whole life coverage means you’re guaranteed a death benefit (subject to policy terms), whereas term life insurance only delivers the payout if you die within the term of your policy.
A whole life policy also offers a feature where you can accumulate cash value that you can borrow against in the form of a loan**. Some examples of how this could be helpful would be for things like: helping with a down payment on a house, college tuition or emergency expenses. Term coverage does not offer this benefit.
Customizing Your Term Life Policy
American Family Life Insurance Company offers a number of additional coverages that you can purchase to build a life policy that suits your needs. Here are a couple of the additional coverages available* for Term Life:
Children’s Insurance Rider: Provides $10,000 worth of coverage on natural, adopted and step children of the primary insured.
Waiver of Premium Benefit Rider: Waives premiums if the primary insured becomes totally disabled.
Accidental Death Benefit Rider: Provides your beneficiary with an additional death benefit, up to $100,000 if death occurs from accidental death as defined in the rider.
In addition to the coverages available for purchase mentioned above, each policy automatically comes with an Accelerated Death Benefit option (to be added at time of need). This benefit allows the policy owner to collect a part of the death benefit under certain conditions if the primary insured is diagnosed with a terminal illness.***
Is Term Life Insurance For You?
Though term life can be a great option for many stages of life, this type of life insurance is popular with younger people who are just starting their families, new homeowners with a mortgage, or those who wish to provide funds to replace income for loved ones if they were to die.
Does Term Life Insurance sound right for you? Contact your American Family insurance agent. They’ll help you build a customized policy that fits your unique lifestyle.