Term Life Insurance
Term life insurance
Term life insurance is often touted for its "pure insurance protection," which includes none of the cash value features inherent in whole life policies. Term life insurance covers you for a specific period of time - as short as one year, or as many as 10, 20, or even 30 years. You can also buy term insurance that covers you until you reach a certain age, usually 65 or 70. Term insurance policies expire at a set time.
Generally, you purchase term life insurance if you want to protect your loved ones from debts. For example, if you and your spouse own a home, and you were to die tomorrow, your spouse could be stuck paying the mortgage on his or her own. If you had a term life insurance policy, your spouse could have enough money from the policy's death benefit to pay off the mortgage.
Term life insurance doesn't just cover specific debts, however. If you have children or if your spouse does not work, term insurance can protect your family's finances, providing money for college and living expenses if you die before your children are fully grown.
Term life insurance Medical exam
When you apply for term life coverage, the insurance company will probably require a medical exam before issuing a policy. Some companies require a medical exam for all policies, but others require the exams only for policies with a substantial face value. The examination is basic, covering your height, weight, medical history, and blood and urine testing. With the blood and urine tests, the insurer looks for specific medical problems. Positive results could affect your premium, or even your ability to buy a policy.
Smokers will pay more for life insurance, although cigar smokers might get less expensive premiums than those using cigarettes. If you smoke marijuana, but not cigarettes, you still must admit to being a smoker on the policy application. Insurers don't generally differentiate between different types of smoke inhalation. (Marijuana users must also disclose their drug use.)
As you age, the likelihood you will die sooner increases. That's why older individuals pay more for life insurance. Many term policies give you the option to renew your coverage at the end of the term without undergoing another medical exam. You also can lock in low premiums by asking for a "level premium" policy. That means for a specific time period, say 20 years, your premium rate stays the same. After that term expires, your rates will increase.
Term life insurance without a Medical exam
If you have trouble finding life insurance because of illness or a troubled medical history, you can turn to guaranteed issue life insurance coverage, also called "quick issue" or "simplified issue" insurance. Guaranteed issue policies require no medical exam, but you pay a higher premium in exchange for the guaranteed coverage. That's because the insurance company takes on more risk in insuring people without knowing their medical condition. Guaranteed issue policies can require waiting periods before coverage kicks in, and often require yearly fees. They might be the only option for some people. A life insurance broker can search the marketplace for a guaranteed issue policy that meets your needs.