Can I Use Term Life Insurance While I'm Alive? | Quotacy Q&A Fridays - YouTube

Welcome to Quotacy's Q&A Friday

where we answer your life insurance questions.

Quotacy is an online life insurance broker

where you can get life insurance on your terms.

I'm Jeanna and I'm Natasha

Today's question is: can I use my term life insurance policy while I'm living?

Term life insurance is designed to provide your family cash

if you die unexpectedly, but there are add-ons you can get with your term policy

that can provide benefits in certain circumstances while you're living.

Some of these riders are free of charge and some can be added with a small fee.

Today we'll go over four term life insurance riders.

An accelerated death benefit rider allows a policyowner

to make a claim on the death benefit if the insured is diagnosed with a terminal illness.

In layman's terms, normally the death benefit isn't paid unless the insured person dies

but with this rider if the insured person is diagnosed with a terminal illness

the benefit can be paid early.

In most cases, you can choose to claim the entire benefit or just a portion.

If the entire benefit is claimed, the policy terminates.

If a partial benefit is claimed, the life insurance policy can continue

with a reduced death benefit and lower premiums.

Let's look at an example.

John bought a $500,000, 30-year term life insurance policy when he was 30 years old.

His monthly premiums are $29.87.

John is now 50 years old and was just diagnosed with terminal stage 4 lung cancer.

His doctor gives him up to a year to live.

John sends in a request to his life insurance company

and applies for $100,000 in accelerated death benefits.

He plans to use this money to take his entire family

on a week-long vacation to Hawaii.

After receiving the accelerated benefits of $100,000,

his policy's death benefit will be $400,000

and his premiums dropped to $26.08 per month.

The accelerated death benefit rider is included free of charge on most term life insurance policies.

Next up, the conversion rider.

A conversion rider allows a policyowner to change or convert

their term life insurance policy into a permanent life insurance policy.

The biggest benefit to this rider is that you can convert your policy

without needing to prove you're still insurable.

In other words, you could buy a term policy

and years later be diagnosed with cancer

and still be able to convert your term policy into a permanent policy,

which lasts your entire lifetime.

If you choose to convert, your premiums will increase.

You now own a permanent policy, not term,

and permanent life insurance is far more expensive.

But many insurers allow policy owners to do a partial conversion.

By doing a partial conversion, you'll now own two separate policies:

your new permanent one and whatever is remaining on the term policy.

Let's look at an example.

John is paying $20 per month for a 20-year $500,000 term life insurance policy.

His policy is set to expire at age 65 right when he's about to retire.

Unfortunately, at age 60 he's diagnosed with chronic kidney disease.

He's going to get treatment, but knows his condition cannot be cured.

He doesn't want to risk his coverage ending and leaving his family with endless medical bills

so he decides to convert half of his term policy into a permanent one.

His new premiums will be $490 per month for the $250,000 permanent policy

plus $14 per month for the reduced $250,000 term policy.

If he dies within the next five years his family receives $500,000.

If he's still living after five years, the term policy will expire

and he has the $250,000 permanent policy remaining.

As long as John keeps paying the premiums, this policy will pay out $250,000 no matter when John dies.

Conversion riders are included free of charge on most term life  insurance policies.

Now let's talk about the waiver premium for disability rider.

That one's a mouthful, but kind of self-explanatory.

If you become disabled, this rider will waive your premiums.

So, if you become ill or disabled and are unable to work

the insurance company will keep your policy active while not requiring any premium payments.

You will need to continuously provide medical proof of your disability for as long as you need the rider benefits.

And once you're able to go back to work you need to start paying premiums again.

But all the waived premiums do not need to be paid back.

There is a small cost to add this rider. Let's look at an example.

John is 30 years old and applying for a 20-year $500,000 term life insurance policy.

He's a non-smoker and in great health.

His agent finds him a policy for $19.66 per month, but after going over rider options

he decides to add the waiver a premium for disability rider.

Doing so increases his monthly premium to $22.61 per month.

The last rider we'll talk about today is the unemployment protection rider.

An unemployment protection rider will waive your premium payments

if you experience long-term unemployment.

These premiums will not need to be paid back.

There is a small cost to add this rider. Let's look at an example.

John is 30 years old and applying for a 20-year 750 000 term life insurance policy.

He's a non-smoker and in great health.

His agent finds him a policy for $38.53 per month but after going over rider options

he decides to add the unemployment protection rider.

Doing so increases his monthly premium to $40.57 per month.

We want to note that this rider is quite rare since few insurance companies still offer it

but ask your Quotacy agent if you're interested in adding it to your term life insurance policy.

Ready to get life insurance?

Pop on over to Quotacy.com.

Our term life insurance quoting tool is super easy to use.

You can see quotes in real time without giving any contact information.

When you're ready the online application only takes a few minutes.

After submitting it your Quotacy agent will reach out to introduce themselves

and they're happy to provide rider information and pricing if you'd like to add any to your policy.

Thanks for watching.

if you have any questions about life insurance, make sure to leave us a comment.

And if you have any questions regarding today's topic

check out the blog link posted below.

And if you're ready to get quotes check out Quotacy.com.

We're here to help you find the best deal on the life insurance you want.

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