Term Life Insurance Articles
Reasons To End A Term Life Insurance Policy Before Retirement
2010-06-07
Sometimes, it's better to have no life insurance. Surprising as this may sound, it is a recommendation made by many financial gurus for people who are setting up their eventual retirement plans. Since term life insurance inevitably becomes more expensive with age; the theory holds that the product is best used only so long as is necessary before getting rid of it altogether. Some experts recommend choosing an insurance policy length that will terminate just as retirement begins, so as to get the most bang for the buck, but still retain all of the safety and security that term life insurance provides. While this can be a slightly risky gamble, it can pay off if everything goes to plan.
Term life insurance has no cash value and will never pay out unless the policy holder dies. For a couple that is saving for their retirement, holding a life insurance policy makes sense for both of them, since if one was to pass away, the other would at least receive some money to tide them over. Ideally, the couple is going to invest their money well, and when retirement arrives, will have more in the bank than would be paid out by the term life insurance policy. At that time, since the cost of the policy would be increasing relative to its benefit, it would make financial sense to let the term expire and not renew it.
For people looking into this type of option, there are typically two routes used. The first is a traditional long-term life insurance policy. This will have a substantial length, say 20 or 25 years, coupled with a slowly-increasing premium. When retirement hits, the premium will be double or even triple what it began as, and so long as there is enough money in a retirement account, should be allowed to expire. The other option is a fixed annual rate policy. In this case, the premiums will not increase but the insurance policy length must be even more substantial, in the order of 30 or 35 years, in order for the insurance company to consider it a profitable deal. This allows for a steady amount of money to be withdrawn, but over a longer period of time. In both cases, once the term has expired, obtaining new term life insurance would be extremely expensive.
If the choice is made to use term life insurance as a guarantee until retirement, care must be taken to make sure that the assets are in place to support a family or couple when the time arrives. While this can be a risky venture, it can be an extremely efficient use of term life insurance if done properly.
Free Insurance Quotes
Sometimes, it's better to have no life insurance. Surprising as this may sound, it is a recommendation made by many financial gurus for people who are setting up their eventual retirement plans. Since term life insurance inevitably becomes more expensive with age; the theory holds that the product is best used only so long as is necessary before getting rid of it altogether. Some experts recommend choosing an insurance policy length that will terminate just as retirement begins, so as to get the most bang for the buck, but still retain all of the safety and security that term life insurance provides. While this can be a slightly risky gamble, it can pay off if everything goes to plan.
Term life insurance has no cash value and will never pay out unless the policy holder dies. For a couple that is saving for their retirement, holding a life insurance policy makes sense for both of them, since if one was to pass away, the other would at least receive some money to tide them over. Ideally, the couple is going to invest their money well, and when retirement arrives, will have more in the bank than would be paid out by the term life insurance policy. At that time, since the cost of the policy would be increasing relative to its benefit, it would make financial sense to let the term expire and not renew it.
For people looking into this type of option, there are typically two routes used. The first is a traditional long-term life insurance policy. This will have a substantial length, say 20 or 25 years, coupled with a slowly-increasing premium. When retirement hits, the premium will be double or even triple what it began as, and so long as there is enough money in a retirement account, should be allowed to expire. The other option is a fixed annual rate policy. In this case, the premiums will not increase but the insurance policy length must be even more substantial, in the order of 30 or 35 years, in order for the insurance company to consider it a profitable deal. This allows for a steady amount of money to be withdrawn, but over a longer period of time. In both cases, once the term has expired, obtaining new term life insurance would be extremely expensive.
If the choice is made to use term life insurance as a guarantee until retirement, care must be taken to make sure that the assets are in place to support a family or couple when the time arrives. While this can be a risky venture, it can be an extremely efficient use of term life insurance if done properly.
