Term Life Insurance provides the most coverage for the lowest initial cost. The coverage is so great because the benefit is paid only if the insured dies within the designated term of the policy.

Term Life Insurance plays a vital role in proper financial planning. The most common reasons to buy Term are as follows:

• You have a temporary need which lends itself to a temporary solution, i.e., raising children, education, paying off a mortgage, a business buy/sell agreement.
• You have a permanent need for protection (such as liquidity for the purpose of paying estate taxes), but since term is initially less expensive, it fits better into your current budget. You might want to purchase a term policy with the intention of converting to permanent protection later.

The most common form of Term Life Insurance today is "Guaranteed Level." With Level Term Insurance, your protection and premiums remain constant throughout the term period. After your selected term expires, your premiums will sky rocket immensely if you keep your coverage. For planning purposes, you should not intend to keep your Term policy after term period.

Most Term periods are for 5-10-15-20 or 30-years; however, recently 5 year term policies have become virtually extinct. A newer term option offered by a few insurers is to dial down your term period to the exact time period you need such as 28 years.

Compare Term Life Insurance Rates Now!

Term Life premiums have gone down a lot since the early 70’s when coverage for a 35 year old was over $4 per 1,000 while today that same coverage can be bought for just $.33 per 1,000 assuming a 10 year $500,000. Thanks to technological advancements, insurers have been able to increase their efficiencies over the years. Term rates hit all-time lows in 2009, but have recently started to increase due to heightened insurer reserve requirements resulting from the 2008-2009 financial crisis.

We know you have a lot of choices when buying term life insurance, and we are proud that you have chosen Phillips Financial & Estate Planning Specialists.  With more than 20 years experience processing Term Life Insurance, we have developed processes to streamline your application, making applying for insurance simple and painless.

Steps to Completing Term:

Here are the Five main steps to completing your application and receive a Term Life Insurance Policy.

1. Provide the information to begin the application process.
2. We will confirm the information received from you.
3. The application is submitted to the insurance company along with a medical exam.
4. The insurance company will review and underwrite the application.
5. We will receive the term life insurance policy from the company and mail your policy to you.

1. PROVIDE THE INFORMATION NEEDED TO BEGIN THE APPLICATION PROCESS:

• Complete and submit the online risk questionnaire to find a plan suitable for you.
• Select the insurance company that best suits your needs.
• Complete the Application Request Form and submit.  This lets us know which term life insurance that you want.

2. WE WILL CONFIRM THE INFORMATION RECEIVED FROM YOU:

• We call you before the close of the next business day to verify the information received and that the product selected suits your needs.
• We will send you the application by Priority Mail or by email within two business days.
• Some states require a signed insurance illustration.  If so, it will be included in your package.  Please sign it and return it with your application.
• If you want coverage during the underwriting process you can conditionally bind your coverage.  To do so, you will need to include a check for the premium amount you have selected made payable to the company you  have chosen.  If you have questions about the benefit of binding the policy, please call us at 1-888-892-1102.

3. A MEDICAL EXAMINATION IS SCHEDULED AND COMPLETED:

• We will contact a mobile medical representative in your area who will contact you to schedule a time for your physical examination.
• The exam can be conducted at your chosen time and location and at no expense from you.
• We typically need to allow the examiners 7 days advanced noticed before your exam.

4. THE INSURANCE COMPANY UNDERWRITES THE TERM LIFE INSURANCE APPLICATION:

• The insurance company may contact your physician for an Attending Physician’s Statement (APS).  You can help expedite this step by calling your doctor and ask that they reply promptly to any request for information from the life insurance company.
• The underwriting process generally takes the insurance company about six weeks after the exam is completed and your application is submitted.  The most common delays are due to incomplete answers on your application and the time needed for the company to obtain medical information from your physician. 
• We will update you during the processing, but if you have any questions about the status of your term life insurance application, please contact us at 1-888-892-1102.

5. WE WILL OBTAIN AND MAIL YOUR TERM LIFE INSURANCE POLICY TO YOU:

• When the review is completed, the insurance company will contact us concerning how they have rated and priced your policy.  We will work hard for you to get the term life insurance rates originally quoted and we will contact you immediately if there is a difference in rates.
• We will forward your policy to you as soon as we receive it in our office.
• Your initial premium payment (unless you included it with your application) and any other final delivery requirements will be requested when we send your policy. 
• Your future premium payments will be sent directly to the life insurance company.

At this point you're free to hold up your 3 iron in a lightening storm...your coverage is in-force!

By Todd Phillips

Free Parking

You’re driving in downtown looking for parking at your new job when you see a sign which says “Parking on the South side: $1 per day; Parking on the North side: $1.50 per day.” You tally up your costs and estimate you’ll save at least $10 per month parking on the South side. Naturally you pull up to the South curb, but walking into your office on the North side you read a sign that says “All North side parking fees will be refunded at the end of the month.” With your net cost of $0 to park on the North side the choice is obvious; you commit to North side parking.

The same analogy can be used comparing regular Term Life Insurance to Return of Premium Term Life Insurance (ROP Term). Unlike traditional Term Insurance where you buy coverage for a specified term period such as 15, 20 or 30 years but get nothing back if you outlive the term, ROP Term will pay a fat check of all the monies you had paid towards the policy. In fact, on most ROP Term policies you don’t have to wait until the end of your Term to get money back. A percentage of your premiums can become available after 5 to 10 years into the policy. Generally the longer you keep the policy the higher percentage you'll get back up to 100%. Note: If you die during the term period the most your beneficiaries will get is the death benefit without any premium return.

ROP Term Costs

ROP Term typically costs more than a traditional Term and the shorter the term the more expensive it will be compared to the traditional term. However, the extra cost is justified by those who have the confidence they will outlive their policy or by those who can't get over the feeling that term life insurance is money down the drain if the insurance benefit is not paid out.

Buy Term and Invest the Difference

A lot of our clients still choose the cheap Traditional Term because they think they can take the difference between Traditional Term and ROP Term and invest the difference in savings. While this is true, few ever actually invest the savings, and those who do need to make more on their investment side accounts than the money accruing in the ROP policy.

Here’s an example using current term prices: Let’s take a male age 35 with a preferred rating buying a 30-Year Traditional Term policy with $500,000 coverage vs. buying ROP for the same benefit. The traditional policy premium is $465 per year and the ROP is $916 (a difference of $451). Over the course of the 30 years he paid $27,480 for the ROP and $13,530 for the Tradition Term – ($13,530 more for the ROP). If he were to invest the savings each year into a side fund he would need to average at least a 4.25% return to breakeven. Sure 4.25% is attainable and you probably could exceed that return, but remember the ROP is guaranteed.

Consider that the S&P 500’s 10 year return from March 1 of 2000 to March 1, 2010 was (-.26%). In other words, if you hypothetically put in $10,000 in the S&P 500, the most commonly used stock market benchmark, (dividends not included) that $10,000 would have dropped to $7,448. And with interest rates on CDs yielding less than 2%, 4.25% guaranteed doesn’t sound so bad. But more importantly in my opinion is serves as a forced savings. You set up to have the premiums automatically deducted from your bank account and before long, your ROP Term is over and you have $30,000 waiting for you.

Don't Delay!

Caution: Don't delay! Many insurers are discontinuing ROP Policies because of the increased reserve requirements to cover the guarantees.