Lifetime term covers the loss from a risk that is guaranteed to occur - fountain of youth not withstanding. No one lives forever, everyone will someday die. The question to consider is "Does it make sense to protect from a risk that is certain with a type of insurance that probably will not be inforce when the insured dies?"
Insureds have been told by many financial gurus that people should insure these permanent risks with temporary term insurance. Certainly, if the risk that needs protecting will expire in a known number of years - a 30 year home mortgage for example (assuming that the client will never buy a newer house or refinance in the future), income for a minor child, a bank loan or some business insurance situations like "keyman" coverage, these temporary risks can usually be adequately protected by term insurance.
Unfortunately, when clients try to protect against permanent risks with term insurance, they usually live longer than either they can afford to pay the ever increasing premiums or the term coverage terminates before they do.
Fortunately for today's consumers, leading edge carriers have developed a "Lifetime Term" product. These products have low guaranteed level premiums, payable to age 100 and death benefits that last to age 120 on a guaranteed basis, as long as the premiums are paid as planned. This "Lifetime Term" product is built on a Universal Life chassis, but it builds very low cash values, yet secondary guarantees provide the death benefit even if the policy has no current account or cash values.
Today's consumers can pay a guaranteed low lifetime premium and receive a guaranteed death benefit that will last to age 120. Some carriers offer an age 100 guarantee, but as more and more individuals are living past age 100, it's strongly suggested that consumers insist on age 120 coverage.
For example let’s look at the cost of “Lifetime Term” versus 20/30 year level term contracts for an individual age 50, in the preferred non-tobacco Take note that the renewal term premium in the very first year of renewal already costs more than the total of all premiums in the guarantee period. For example 20 year term – first 20 years of premium totals $14,200, year 21 renewal premium $15,802 and for 30 year term – first 30 years of premiums total $33,660, year 31 renewal premium $75,892.
Which policy should you recommend to your clients for their permanent needs? If you are unsure study the table above. The only time that your client’s cost of insurance is less is if the insured dies within the initial premium guarantee period.
Ask your client whether they want the temporary or lifetime term. What should you buy on your own life. Ask us for our spreadsheet of these “lifetime term products” for your prospect.