subject: Term Life -- Essential Add-Ons & Ones to Avoid [print this page] Some form of life insurance coverage is essential for anyone with serious financial commitments -- a spouse, children, elderly parents, or one's own business, for example. However, it isn't necessary to bite the bullet and buy an expensive policy with no added benefits. There are ways for individuals to make the dollar stretch further when it comes to term life coverage.
Typically, one purchases a term policy that is good for a period of 10, 15, 20, or 30 years. Assuming that you are a young person with family responsibilities, those amounts may not span the entire period of time for which you need insurance. This is also true if you have a history of health issues and wish to purchase coverage in your twenties rather than paying higher rates as an older adult. If you expect to need a new term policy when yours expires, the renewable option is an important one to consider.
Buying renewable term life will allow you to renew your policy when it expires for a lower rate that you would be expected to pay for a new one.
You can also save money in the future by investing in convertible coverage. As a young mother or father, money may be tight and inexpensive term life may be your best option. As you age, however, you may wish to upgrade to an investment-based whole life plan. The premiums will be higher, but benefits like interest and cash-based annuities can be extremely rewarding. You will also be able to draw on your policy for retirement and other expenses later in life.
A final way to save money is to avoid unnecessary add-ons; you should only pay for coverage that applies to your life. One rider that is often seen on insurance policies but that rarely has benefits is the accidental death and dismemberment rider. Individuals should purchase a high enough term benefit to cover financial responsibilities regardless of how they die. The dismemberment aspect of the rider does not pay well, and carrying it is a waste of funds. Advisers suggest putting that extra money in the bank, or spending it to upgrade to a higher death benefit.
Buying - and avoiding - these tricky add-on options is an important way to make the most of your life insurance coverage. Why throw your money away when you can save it for another day?
