Protect the people you love when you can no longer be there.
Term life insurance, as the name suggests, provides coverage for a specific period, usually five to 30 years. You can choose the length of time, or term, depending on your needs. The policy only pays your beneficiaries if you pass away during the term.
A Finite Time Frame
Term life insurance can offer a cost-effective way to make sure that your loved ones have funding for specific needs, such as college or a mortgage, for a finite time frame if you die. Once those needs have passed, you may no longer need the coverage.
The premiums for term insurance are usually less – and, when you are young, often significantly less – than the premiums for permanent insurance, which does not expire. This means you might be able to afford much more coverage than if you bought permanent insurance.
How Premiums are Calculated
The premium for term life is determined by the amount of the death benefit, the age and health of the insured, and the length of the term. Generally, the premium remains the same until the end of the term. Some term policies are guaranteed renewable until you reach a certain age, such as 65. However, the premiums for renewal or new term policies usually increase as you age. Some term policies also allow you to convert your term coverage to permanent coverage, although your premium will be higher.
Term Life Pros
- Premiums are less expensive than premiums for permanent coverage. When you are younger, they can be considerably less expensive. This means you can get maximum coverage for an affordable cost.
- Term life can allow you to increase your level of life insurance when your needs are greatest, such as when your children are young or when you have college or mortgage expenses.
- As with all life insurance, the death benefit generally passes to your heirs income tax-free.
- Term life can give you maximum peace of mind at a minimum cost.
Term Life Cons
- If you don’t die before the end of the term, your family receives no benefit.
- With most term life policies, you cannot build cash value in or take loans against your policy.
- If you renew your term coverage at the end of the term or add term coverage, the new premiums will be higher due to age. This may make the policy cost-prohibitive for older people.
Term insurance might be right for you if:
- You are looking for maximum life insurance coverage at an affordable cost.
- You have specific financial concerns, such as your child’s college or a mortgage, that are not permanent.
- You want to augment permanent life insurance coverage for a specific period of time.
Comparison with GEBA’s Group Term Life insurance
GEBA’s Group Term Life Insurance1 plan is a unique product for our members. Your group coverage continues as long as you are current on your premiums. The Group Term Life Insurance policy differs from Individual Term Life Insurance in that the coverage is capped at $600,000 for the member, the rates will increase throughout the term based on age, and your coverage decreases at age 65.
With Individual Term Life coverage, your premiums remain the same for the length of the term, and there is no limit on coverage amounts. Please visit geba.com for details. GEBA’s Insurance and Investment Consultants can help advise you about whether a Group or Individual Term Life policy best fits your needs.
We’re Ready to Help
You can call (800) 826-1126 to set up an appointment with one of our licensed Insurance and Investment Consultants. GEBA Consultants understand your federal benefits and work with you to understand your needs and find the best life insurance solution for you. We shop the marketplace on your behalf to find the best plan. GEBA works only with highly-rated, reliable insurance companies, so you can be confident that your benefit will be there when your family needs it.
1 Group Term Life Insurance plan underwritten by New York Life Insurance Company, 51 Madison Avenue, New York, NY 10010 on Policy form GMR. For information, including features, cost, eligibility, renewability, limitations, and a rate chart, visit www.geba.com/termlife.
*Life insurance is not guaranteed by the FDIC. Any guarantees are contingent on the claims-paying ability of the issuing company.