20-Year term life insurance plans are one of the most popular policies issued by major life insurance carriers. 20-Year term life insurance plans provide stable and affordable life insurance protection. Most plans guarantee that the premium will remain level for 20 years and the death benefit will not reduce during that time. This type of coverage is ideal for individuals, families or businesses that wish to provide a large amount of death benefit for approximately 20 years at a reasonably low cost.
The death benefit is guaranteed and not subject to federal income taxes. If you are still living at the end of the 20-year term, your policy ends. However, if you are still healthy, you may apply for a new policy for any face amount or term limit (subject to company restrictions). Your new rate will be based on your current age and health. Of course, you can apply for a different face amount of coverage.
A common mistake is buying a less expensive 10-year term life policy with the intention of purchasing an additional 10-year term life policy in 10 years. Initially, your premium payments will be lower. However, by waiting 10 years to purchase coverage, if your health changes, premiums for the second 10-year term life policy could substantially increase, or you could possibly become uninsurable. Although common conditions such as high blood pressure or high cholesterol won’t always substantially increase the rate, certain conditions, such as diabetes could easily double the premium.
When you purchase a (guaranteed) 20-year term life policy, any change in your health during those 20 years will have no affect on the rate. Whether you put on weight, start taking new medications or have multiple surgeries, your premium will not increase. Also, if you decide you no longer need coverage, you may cancel the policy at any time. You are never required to keep the policy any longer than you want.
Optional riders are available with most 20-Year term life plans. Some of the most common riders include:
* Waiver Of Premium If the primary insured becomes totally disabled, premium payments are waived.
* Accidental Death Benefit If the insured does as a direct result of a covered accident, an additional death benefit is paid in addition to the original face amount.
* Living Benefits If the insured is diagnosed with a terminal illness (life expectancy of less than one year), a portion of the death benefit may become available as an immediate cash benefit.
Each company will have different guidelines and availability on their term life insurance plans. In addition to 20-year level term plans, most major life insurance companies offer 10-year level term policies and 15-year level term policies.
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