Term life insurance is a type of plan that lasts for a set number of years. When you apply for insurance with Western, you can choose different lengths of time for your coverage, such as 10, 20, or 30 years. Some people call it temporary insurance. Term insurance does not have cash value, so if you decide to cancel your policy, you won’t get money back.
However, one of the greatest things about term insurance is the cost! Typically, you can get a larger face amount and spend less than you would on a permanent whole life plan.
For example: Jason is a 30-year-old non-smoker who is interested in purchasing $100,000 worth of life insurance. He compares the price between a whole life and a 30-year term, and finds something surprising. For the whole life policy, Jason would pay $100.19 per month but for a term policy, only $20.90 per month.* That’s quite a difference!
The type of insurance you buy depends on what needs you have to “cover” at that time in your life, what your goals are, and how much you can afford. Jason is married with one child, and needs the most coverage now to cover the cost of his mortgage and other debt if something were to happen to him. Down the road, he may not need as much coverage. For example, if he pays off his house and lowers his debt he could “downsize” to a lower face amount, or death benefit.
The best way of downsizing your face amount, and choosing to make your insurance permanent, is to convert your term plan to a permanent plan.** Now, let’s say that Jason has had his term policy for 20 years, has paid off his mortgage, and has minimal debt. He decides he doesn’t need $100,000 of coverage, but he does want to have the kind of policy that grows cash value. He also knows that at the end of his current 30-year term policy, if he renews, his premiums will go up because he will be older. So – thinking ahead – Jason decides to convert his policy to a permanent whole life plan with a death benefit of $25,000. The wonderful thing about converting is he doesn’t have to answer health questions, and with a permanent plan his rates will never go up.
What a smart cookie! He must have a good Western agent helping him. This is a perfect example of how Jason purchased his insurance wisely. In the beginning, he bought a less expensive plan with more coverage for the years when he was younger and had more need. Later in life Jason converted to something that wouldn’t have rate increases in the future, but still gives him adequate coverage. It’s just a great plan.
If this is something you are interested in, see a Western agent today or contact the Home Office.
*In good health, subject to underwriting.
**Make sure to keep track of the deadline for conversion on your plan.
ACS, FLMI, Member Programs Assistant
Call 877-935-2467 to speak with a Western Fraternal Life Representative.