Seniors Find New Value in Term Life Insurance
08/25/2016 03:32AM ● Published by Family Features
Those with term life insurance know that it is a cost-efficient option to provide the protection they need during their earlier years of life, but few are aware of the options that may be available to put those policies to work for them as they get older.
How does a term policy work?
Unlike a permanent or whole life insurance policy, which is in place for the life of the insured, a term policy expires when the term is up. Depending on your insurance carrier, the term can range anywhere from a year up to 30 years. A term policy that is “convertible” would allow you to essentially roll your term policy into a permanent policy if you discover your need for coverage will be longer than you originally anticipated.
What if you outlived the need for your term policy?
It is not uncommon for seniors to outlive their need for life insurance. Young children become adults and make their way through college or mortgages are paid off. Whatever the reason may be, it is still unsettling to think that the premiums paid into a term policy for years may result in no return.
If you no longer need the policy or can no longer afford the premiums, though, you could consider selling the policy through a life settlement. This is a financial transaction in which a policyholder works with a company, such as Coventry Direct, to qualify a life insurance policy for sale to an investor. The seller of the policy receives an immediate cash payment, while the buyer assumes all future premium payments then receives the death benefit upon the passing of the insured.
Consider this single father who took out a $1.5 million term policy years ago to provide income protection for his daughter. Once his daughter was married, he no longer needed the coverage and was planning to let the policy lapse. Through a life settlement, the policyowner received $20,000 for the policy, where he otherwise would have received nothing. The proceeds provided him liquidity in his retirement.
Most life insurance policy types can qualify for a life settlement, including convertible term life insurance policies, even though they have no accrued cash value. To learn more about your options, including life settlements, visit coventrydirect.com, or call 888-858-9344.
What options do you have when you still have a need for life insurance?
At the end of a standard term life policy, coverage ceases and the policy holds no monetary value with the insurance company. However, if you still have financial needs, you may want to inquire about the option of renewing your policy or converting to a permanent policy that builds cash value. Either of these options will likely come with increased premiums.
Exploring all available options is important for seniors looking to maximize the value of their term life insurance policies, especially as they’re nearing expiration.
Photo courtesy of Getty Images