Traditional term also know as renewable term is the most common term sold and is the most cost effective. It comes in 10, 15, 20, and 30 year term periods. During the term period the premium and the death benefit do not change. After the term is up it becomes an annually renewable term policy. To keep this policy in force after the term period is up you, would have to pay a new premium amount annually. This annually renewable amount is
much higher than the fixed term premium. I tend to not recommend this type of policy. If the client does not renew after the term period ends, they will no longer have life insurance.
Convertible term insurance works like renewable term. The main difference is that you can convert this policy into a permanent life insurance policy. The convertible term policy I recommend also comes with living benefits and costs a little bit more. WHAT does it mean to convert the term policy into a permanent life insurance policy? This feature allows you to continue your coverage into a fixed indexed universal life insurance policy, or a whole life policy. This way you can continue your coverage for as long as you live.
WHAT are Living benefits?
• Terminal Illness: When the insured has a medical condition with a diagnosis of 24 months to live.
• Critical Illness: Medical conditions that fall under critical illness are heart attack, cancer, major organ transplant, stroke, kidney failure, multiple sclerosis, and other illness.
• Chronic Illness: Is when you are unable to care for yourself for 90 consecutive days and need assistance with two out of the six Activities of Daily Living (Bathing, dressing, eating, toileting, transferring, and continence) or you are cognitively impaired and pose a danger to yourself and others and need substantial assistance.
This policy allows you access to your death benefit to cover you in all three types of illness. I recommend this term policy the most, because of the benefits listed above, but mainly for the convertible option.
Return of premium term is the most expense term policy. This policy will cover you for the full term as long as you pay your premium. Once your term expires, the insurance company returns the premiums paid back to you.