If you are looking for a great type of short term insurance that has a good reputation as a solid policy, then you should consider a 5 year term life insurance policy.
Although, not as well known as longer term policies, 5 year term life insurance policies have been around for a very long time. The great thing about this type of insurance is that it can be sold as a separate policy or as a rider on an existing one.
If it is such a great policy, then why haven’t more people heard about it? This is because many insurance representatives don’t promote it as it is such a short term and has an extremely low premium.
A low premium means a low commission for the agent. This short insurance policy can be very useful if, for example, you are in a very dangerous line of work.
Why Choose 5 Year Term Life Insurance?
Even though it is not as common, there are many portfolios that have this type of life insurance as it does fill a very specific need. For instance, if you have a very dangerous profession and need a short term life insurance policy, then this may be the insurance for you.
Another scenario where a 5 year term would be beneficial is if you need to take a loan for a short period of time. This type of policy can assure the lender that your loan will be repaid in the event of your death. Many people have used this type of policy and see it as a great product to help them leverage collateral.
Another reason to take out a short term policy like this is if you have to pay for college tuition for yourself, your children or grandchildren.
Many like the fact that the face amount of the 5 year term policy remains level for the duration as well as the premium. Many companies allow you to continue to renew the policy beyond the initial 5 year period, but the premium will be higher.
The death benefit for a short term policy such as this is usually income tax free. You also have the option to convert your policy to permanent insurance in the future.
Waiver Of Premium Rider
Another option you may want to look at is adding a waiver of premium rider to your 5 year term life insurance policy. This rider would cover you if, for example, you became disabled. If you have had the policy for at least 6 months, the life insurance company will take over the payment of your premiums, even if it is for the rest of your life.
The fact that most people become temporarily disabled an average of 5 times during their lifetime makes a very strong case to getting a rider like this added to your insurance policy.
Something many people don’t realize is that if you become disabled for at least 6 months most companies will pay your 5 year term life insurance premium for you.
Accidental Death Benefit Or Double Indemnity Rider
The double indemnity rider is perhaps the most famous choice, and can also be attached to your policy. If you should die in an accident the life insurance company will pay to your beneficiary twice the face amount. As tragic as that would be, it really helps to pay down bills and other random expenses that can arise.