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  • Term life insurance

    Do people go for just basic term life insurance or are there any specific riders you should definitely have with the term life insurance like the living benefits rider/waiver of premium etc?

  • #2
    Most of the policies you can buy through a website like Term4Sale.com or through one of the advertisers on this site will come standard with everything you need. The living benefits rider is free with most companies, so I don't see any reason you wouldn't include that.

    Not all Waiver of Premium riders are very attractive and very few of them are specific to your occupation. They may only waive the premium if you become too sick/injured to perform any occupation. I don't personally see much value in this especially if you have sufficient disability insurance in place. If you are considering this rider, at least be sure you get information on the exact terms provided by the insurer you're thinking of applying with.

    It's been written about on the blog before, but Banner Life (called William Penn in New York) offers a Term rider which you can use to create a laddered policy and avoid paying multiple policy fees. For example, if you feel you need $3 million of total coverage for the next 15 years and $1 million for an extra 5 years beyond that, you can purchase a $1 million 20-year Term policy with a $2 million 15-year Term rider. After 15 years, the Term rider drops off and you continue to pay the remaining premium for the $1 million policy only. Simply put, it can help reduce the total cost of your coverage. This isn't always less costly than just purchasing two policies from two different insurers though, so you'll want to evaluate your situation specifically.

     

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    • #3
      Thank you for the information. What do you think of Child rider and Accidental death benefit riders available in some insurance companies?

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      • #4
        The child rider is really dependent on your situation. If you need or simply want insurance on your children it's by far the cheapest option and definitely better than buying a small whole life policy on them - in my opinion. This is probably the most common rider I see being requested or considered on Term policies. Even still though, it's very infrequent.

        I don't typically recommend Accidental Death Benefit riders, but they're inexpensive so it couldn't hurt I guess. First and foremost, you should determine how much coverage you need in order for your family to be taken care of and buy that entire amount in regular Term insurance. Just looking at the price of these riders alone provides a strong indication that they don't pay out very often. In my opinion, this is more of a "bells and whistles" kind of benefit. Certainly not needed, but if you find it particularly attractive and are willing to spend the money, go for it.

        I know this doesn't provide you with exact advice on what to do, but it's really a personal preference. I would make sure you have all your basic insurance and savings in place before considering the bells and whistles.

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        • #5
          Unless you are purchasing your term life policy with the intent to convert to Whole Life or another form of permanent insurance, I would not recommend the Waiver of Premium Rider as it can be 15% or more of the total premium.

          I would not recommend the Accidental Death Benefit Rider as it is expensive and, why would your family need more money if you were hit by a car or died peacefully in your sleep?

          I have also found the child riders to be expensive and not worth the additional premium.

          Term life is simple, try not to make things more complicated then they need to be in terms of your purchase.

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