Frequently Asked Term Life Insurance Questions

Are Term Life insurance policies renewable?

Yes. Term life insurance policies are automatically renewed as long as you are current on your premiums.

Are Term Life insurance premiums fixed? Are Term Life insurance rates locked in? Do Term Life insurance premiums increase?

Yes. Term life insurance premiums are fixed and the rates are locked in, however, if you have term life insurance through your employer, also called supplemental insurance or voluntary insurance, the cost will increase every 5 years.

Are Term Life insurance proceeds taxable? Is Term Life insurance taxable?

According to the IRS, typically term life insurance proceeds are not taxable since the term insurance was purchased using after-tax dollars.

Does Term Life insurance cover natural death?

Yes. Term life insurance will cover death due to natural causes and death due to accidents. However, death due to self-inflicted wounds, death caused by using drugs or alcohol are not covered. Also, keep in mind that each insurance carrier will have a slightly different definition of coverage due to natural death. We can help you sort this out.

Does Term Life insurance expire?

Yes. Term life insurance expires at the end of the term or policy period. Typically, that period is from 10 to 30 years.

Does Term Life insurance have a cash value?

Term life insurance does not have a cash value. If you are looking to have the benefit of both life insurance and a savings or investment, you should consider buying term life insurance and investing any extra money in an index or mutual fund. Many popular and respected financial professionals support this.

How does Term Life insurance work? How is Term Life insurance paid out?

Term life insurance is purchased through a broker or agent or a company-sponsored health plan. The payout is made to your beneficiary on file after a claim has been made by the beneficiary or attorney and processed by the insurance company.

Is Term Life insurance a good idea? Why is Term Life insurance a good idea?

Term Life insurance is a good idea for the following reasons:

  • You currently do not have any life insurance.
  • You only have life insurance through your employer.
  • Cost of term life insurance increases as you get older.
  • You do not want to leave a financial burden on your family.
  • You need a more affordable way to leave money to your family or loved ones.

What happens when my Term Life insurance expires?

When your term life insurance policy expires the policy ends and the coverage is no longer active.

What is Term Life insurance and what does Term Life insurance cover?

Term life insurance will cover death due to natural causes and death due to accidents. However, death due to self-inflicted wounds, death caused by using drugs or alcohol is not covered. Also, keep in mind that each insurance carrier will have a slightly different definition of coverage due to natural death.

Which is better Term Life insurance or Whole Life insurance? Why is Term Life insurance better?

For most people, term life insurance is better because it is more affordable. Term life insurance also gives you a higher amount of coverage for the same premium cost of a Whole Life insurance policy. While a whole life insurance policy can last your entire life, financial experts will tell you that during the time you had a whole life insurance policy you could have purchased a term policy and invested the difference in an index or mutual fund. Those funds would provide you a much higher return than a whole life insurance policy would have.