Does your life insurance fit your needs? Do you need to renew it soon? No one really enjoys thinking about or even purchasing life insurance. However, if you want to ensure that your family is cared for in any eventuality you’ll have to deal with life insurance every now and then.
I have a story to share with you about a client of mine who was in for a shock when the time came to renew his life insurance policy. See what you can learn from his story; listen in to hear it and discover my 3 takeaways.
You will want to hear this episode if you are interested in…
- Renewing a life insurance policy [2:32]
- The definition of term life insurance [4:21]
- Hearing which type of policy is the easiest to get [7:12]
- 3 takeaways from this story [8:20]
What is term life insurance?
You probably have an idea of what term life insurance is, but it may have been a while since you have heard a proper definition. Term life insurance is temporary life insurance. It’s like renting an apartment. When you rent an apartment you sign a lease for a specified amount of time. That means that you’ll have a guaranteed place to sleep for that time period as long as you pay your rent.
With term life insurance you decide on the time period or term. You could choose it to be for 10, 20, or 30 years. When you decide on the term you lock in the monthly payment price for that specified amount of time. As long as you pay the premium, you’ll have life insurance coverage.
What happens at the end of your term?
At the end of your term, you’ll have to renew to continue coverage, but the terms may be quite a bit different as my client learned. This client had had a $4 million policy for a 10-year term. However, when he received notice that the policy was going to expire, he was in for quite a shock. His monthly rate was going to skyrocket from $140 to $830 a month. You see, the pricing for a 30-year-old is much different than that of a 40-year-old. Learn what you can do to help alleviate a bit of the sticker shock when renewing term life insurance.
I learned 3 things from my client’s story that I would like to share with you.
- Pay attention to the renewal period. Don’t let it sneak up on you since the terms may look quite a bit different at 45 than they did at 25.
- Stay healthy. If you can prove you are in good health it will help ease the cost of the renewal.
- Make sure you can access different options. If you are working with a financial advisor, make sure that they can find you as many choices as you want.
Stay in touch to ensure you reach your financial goals
I hope that you have been enjoying all of the tips, tricks, and stories in this Financial Planning Basics series. My goal is to empower you with knowledge so that you can attain the financial freedom to live the life you truly want. Please feel free to subscribe to my newsletter so that you can get FREE worksheets to help you better manage your finances and run your business.
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