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Dos and Don'ts When Considering a Term to 100 Insurance Policy

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Term-to-100 is a form of permanent insurance with premiums payable to age 100.  Generally, term-to-100 insurance will stay in force after the life insured reaches age 100 with the premium payment obligation ceasing at that point.  For most policies, all of the benefits and costs associated with this type of policy are guaranteed for the life of the contract.  This means that premiums are guaranteed not to change.  Generally as long as the premium requirements are met, the insurance amount will be paid by the life insurance company when death occurs.

Term-to-100 policies can vary in design by company.  A traditional term-to-100 policy is one that provides a level death benefit amount with level premiums payable for life.  These policies provide pure insurance protection with no cash surrender value.  The insurance company only pays a benefit at the time of death.

Do #1

Use to get biggest bang for the buck!

Term-to-100 Insurance is great if you are looking for a low cost insurance for the rest of your life for a defined need such as leaving a specific legacy or to pay a final bill where you know the amount in advance.  A term -to-100 policy can be a good choice if you need long-term insurance protection but don’t want or need the additional benefits of a universal life or whole life policy.

Do #2

Pay your premium on time.

With a term-to-100 policy it is important to be mindful of paying your premiums on time as one of the drawbacks of Term-to-100 policies is that they're payable to age 100 (or your entire life whichever comes first) and if you misses a payment at any point prior to death, the policy will lapse after a 30-day grace period. This can create a problem for policyholders who switch banks, but forget to tell their broker or insurance carrier.

Do # 3

Great for boomers.

Do use term-to-100 insurance is you are between the ages of 50-65 and are looking for a generally more affordable permanent protection as compared to the other choices that exists and are looking to pay a set amount towards the premium for the rest of your life.

Do # 4

Take advantage of your health.

Life insurance is potentially the only product in the world where when you need it you generally cannot get it.  In order to qualify for a new policy you may need to undergo medical underwriting and the older you get the harder it is to pass an insurance companies requirements.  The best time to purchase a policy is when you are healthy, not after the doctor has told you you have cancer.

Do # 5

Seek professional advice

Although there is the commercial, "I may not be a 'brain surgeon' but i did stay at a holiday inn express last night"  Permanent life insurance is not for the amateur to understand.  In fact, the amateur usually takes the simple and makes it complicated while the professional has the ability to take the complicated and make it simple.

Don't # 1

Term doesn't always mean Term

Do not consider term-to-100 life insurance as the same as term insurance mainly as they do not typically expire at a specified date or age but provide life insurance for the whole lifetime of the person insured.  The "term" classification of this type of policy is more due to the fact that, like term policies, this type of policy typically provides no cash value.

Don't # 2

Think about the future.

Do not use term-to-100 insurance if you wish to use the product to cover a future estate liability that will keep increasing such as a tax bill or to fund final expenses.  Chances are the cost of a funeral today will be a lot less that the cost of a funeral in 40 years from now.

Don't # 3

A no is not a never.

If you have been declined by the company that you applied for a policy for, do not sit back and say oh well.  There are a number of insurance companies in Canada and they all have different experiences for different groups of people.  Although one company might say no, chances are there will be a company out there who will say yes.  As long as you are working with a professional they will be able to guide you through the process.

Don't # 4

Cheaper isn't always better.

Do not consider Life Insurance to be a commodity like gas.  Instead of looking for the cheapest price, keep in mind company stability and track record.  It is important to be able to pass your sleep test at the end of the day knowing that what you have will be there when you need it most.

Don't # 5

You are not 10 feet tall and bulletproof

Do not assume nothing will ever happen to you.  The probability of passing away is 100%.  It is not an 'if' it is a 'when'.  Talking about death is never one anyone's priority list, in fact research has shown that people are more afraid of public speaking than of dying.  It is imperative to start the conversation with the people you love before it is too late as family and business succession should not begin at the funeral home.

Term-to-100 Insurance is a very simple product and thus is one of the more affordable types of "Permanent Insurance" available.  Although it is simple, care and proper planning must still go into selecting the right product for the right situation.