The 20 year term insurance policy is one of the most sought after life insurance policies.
It has been sold by life insurance companies for many years and some change in the structure of the policy is very evident when comparing the 20 year term insurance policy of yesteryear to that sold at the present time.
The 20 year term policy is used to protect families as the grow and expand. This policy assures families that spouse and children will be able to continue on even after a breadwinners death.
Business partnerships, sole proprietorships and closed corporations also tend to select the 20 year term life policy.
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20 Year Term Insurance Policy
- The Guaranteed Death Benefit
There is not much change in the death benefit of this policy. It is still level, just like it always has been. That means if you buy a $500,000 20 year term insurance the death benefit is the same at the payment of the first premium as it will be at the payment of the premium in year 10 or year 20. $500,000 will be paid at death. This has always been how the policy worked. The change is in the cost.
- The Guaranteed Level Premium
The premium of the 20 year term life insurance policy used to be structured something like this. With some companies the premium would increase every year for 4 years and thereafter would be level for about 5 year.
At year 10 the premiums may remain level or there may be another increase at year 15. It would remain level to the end of the 20 year period. Some other companies would have a guaranteed level premium for the 20 year term insurance policy but the premium would be so high that buying this policy would be almost prohibitive…
Today the guaranteed level premiums of this 20 year life insurance policy are so low that it seems the insurance companies are making a strong effort to entice you to buy it. As a result the 20 year term life insurance policy is more popular than it has ever been.
- The Conversion Privilege
One of the safety nets of most term life insurance policies is the fact that you can convert the policy to a permanent life insurance policy even if you are in such bad health that for all intents and purposes you are not insurable.
If you did not have an insurance policy, knew you were going to die in the near future, and applied for life insurance you would not qualify for it. If you, however, had a 20 year term insurance policy you could convert it just to be certain you had some life insurance at the time of death…
There used to be more limitations as to when you could convert the policy. In other words some policies had to be converted within 15 years. Today, with most policies, conversion can take effect at any time, as long as the policy is still in force.
- The Waiver Of Premium Rider
The waiver of premium rider is still available. This simply states that if you should become disabled, anytime after 6 months of disability, the life insurance company will step in and pay your premiums for you.
You don’t have to pay any premiums for as long as you are disabled, even if it is for the rest of your life. The premiums for this rider are very minimal.
- The Accidental Death Benefit Rider
You can also add the accidental death benefit rider to your policy. If you should die in an accident the life insurance company will pay the death benefit times two to your beneficiary. This rider is a little more pricey than the premium for the waiver.
The life insurance companies have certainly stepped up to the plate with this one. Check out the 20 year term insurance policy.
20 Year Term Life Insurance Is Awesome
One of the most popular life insurance policies is the 20 year term life insurance policy. The purchaser of the policy usually pays a level premium for the first 10 years.
In some cases the premiums remain level and at the same rate for the entire 20 year period, however, some companies increase the premiums starting in year 11 and they remain level for the balance of the 20 year term.
The 20 year term life insurance policy earns no cash values and there, therefore, are no dividends.
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- 20 year term insurance plans
This type of life insurance policy may be totally or partially converted to a permanent policy at any time during it’s lifetime without having to prove that you can qualify for it, that is without having to do a medical examination. There are several uses for 20 year term insurance.
You may use it to pay off a mortgage in the event of premature death. In this case…let us assume you have a mortgage balance of $100,000. You buy a policy for the entire $100,000. Let us assume you die years later when the balance owed is only $60,000.
The insurance company pays off the mortgage and the $40,000 balance goes to your named beneficiary. This is a good policy for a young family to start off with because it is fairly inexpensive.
Young married people need to accumulate as much cash as possible as quickly as possible. They may need to save for an upcoming baby, or, may be, for the down payment on a house. They need an inexpensive life insurance policy for family protection. They can, thereafter, put their noses to the grindstone and save as much as they can in their bank accounts…with their aforementioned goals in mind.
Business people find this 20 year term policy very useful. You just started your business, you are reinvesting every dollar that you can put your hands on in your business.
You need the least expensive life insurance to cover shareholders in the event of premature death. This 20 year term life insurance policy is ideal for the situation.
20 Year Term Life Insurance
- Have you ever looked at the 20 year term life insurance policy?
- Have you examined how it works?
- Do you think it is a good policy for your particular situation?
- Are you thinking about using the 20 year term insurance policy to protect your family in the event of your premature death?
- Are you in business? Would you use this policy to fund a buy sell agreement or may be for key man or key employee insurance?
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The Popular 20 Year Term Life Insurance Policy
Regardless of how you plan to use the 20 year term policy you have chosen a good policy to check out. This is probably the most bought term policy. Let us see why.
What Makes This Policy So Outstanding?
- This policy maintains a guaranteed level death benefit for the duration, 20 years. It never decreases.
- The premiums of this policy are also guaranteed level for the 20 year period in most cases.
In some cases the premiums start out lower than usual and increase after a period of time, for example 10 years.
The premiums usually remain level for the second 10 year period as well.
- The proceeds payable at death are usually paid out free from Federal Income Taxes.
If the policy is a part of ones estate the proceeds may become taxable.
- The owner of the 20 year term life policy has the right to convert the policy to a permanent policy within a specific number of years.
No evidence of insurance is required. I refer to a medical examination or inspection report.
- Like any other life insurance policy the proceeds of the 20 year term life insurance policy can be paid out either in one lump sum or in the form of a monthly income.
- Premium payment can be made once per year, twice per year, four times per year or on a monthly basis.
Why would a person buy a 20 year term insurance policy?
The 20 year term life policy was designed to fulfill temporary needs for life insurance coverage but many people now think of this policy as a permanent solution.
- This policy is bought mainly to protect a family in the event of the death of the breadwinner.
- This policy can be used to fund a buy sell agreement in the event of the death of a business partner or a stockholder of a corporation.
- This policy can be used for key man, or to be more politically correct key employee, insurance.
If you choose the 20 year term life insurance you have the option of adding the waiver of premium rider to the base policy, at a minimal extra premium.
This rider simply states that if you should become disabled the life insurance company will waive your premiums.
Whenever you are able to go back to work you pick up the premiums again. You must, however, be disabled for a minimum period…6 months with most companies.
You can also add the accidental death benefit rider to your 20 year term life insurance policy, also at a minimal cost.
This rider simply states that if you should die in a accident the life insurance company will pay twice the face amount of the policy to your beneficiary. This is most commonly referred to as the double indemnity clause.