Posted by Amy Carbone on Sep 11, 2023 2:00:33 PM
Life insurance is a vital way to provide your family and loved ones with financial security in the event of your untimely death. There are two major types of life insurance: term and permanent.
Term life insurance is intended to provide life insurance coverage for a fixed number of years and is frequently used by practicing dental professionals to protect family, provide an estate in the event of premature death, help fund business buy and sell agreements and serve as collateral for business and other loans. It is often the ideal choice for young dentists just starting out as it provides large death benefits at a relatively low cost.
Permanent life insurance may provide lifelong life insurance coverage that may grow in value and accumulate cash value that may be withdrawn or borrowed upon. Premiums are higher than term life insurance coverage initially but, depending on the policy, may remain level or be discontinued while maintaining the life insurance coverage.
Below, we’ll discuss term life insurance so you can decide whether it may be the best fit for you.
What Is Term Life Insurance?
Term life insurance is a type of life insurance that is intended to pay benefits to beneficiaries should you pass away while the policy is in force. It may provide a safety net for your loved ones in the event of your premature death. Unlike permanent options, a term life insurance policy has a fixed “term” during which it is in force. Depending on the specifics of your policy, your coverage may be eligible for an extension upon expiration or it may have a feature to convert to permanent life insurance.
How Long Is Term Life Insurance Good For?
Although this will vary depending on the details of your policy, term life insurance timeframes generally range from 10 to 30 years. Due to this time limit, it is often more cost-effective than permanent life insurance policies, but the benefit expires after the indicated timeframe. In the event of your untimely passing outside of your policy’s timeframe, your family will not receive benefits.
What are the Benefits of Term Life Insurance?
You Can Choose the Term Length and Coverage Amount
You can select the length of your policy coverage and how much in benefits your beneficiaries will receive in the event of your premature passing. This is an extremely flexible option that could meet your current life insurance needs, and enable you to look at other insurance options whenever you're ready.
Generally More Cost Effective
You can’t cash out on your term life insurance policy because the number of years covered is limited and typically the policy will not build a cash value. But this is also one of the reasons why the policy is less expensive than permanent life insurance options.
What Determines Term Life Insurance Rates?
The rates of your term life insurance policy are determined by:
Your Age. Typically, as you age, you can expect to see slightly higher rates. It may be a good idea to consider a term life insurance policy now if you are a recent dental school graduate.
Your Health. If you are in good health, it’s likely that you will live longer. This poses less risk for the insurance provider to cover you, which means they are likely to offer you a lower rate.
Your Gender. All other things being equal, females pay less for life insurance than their male counterparts.
Policy Features. Specifications in your policy may dictate your rates. For example, all other things being equal, a 15-year policy will cost more than a 10-year policy.
Who Should Consider Term Life Insurance?
Every dentist or dental student may use term life insurance coverage to provide financial protection for themself and/or their family. Term life insurance is often used to provide a large benefit to growing families for relatively low premiums. Term insurance may also be required by a lender if you wish to secure a loan, for example if you are borrowing to start a dental practice.
Is Term Life Insurance Right for You?
To determine which life insurance policy is right for you, discuss your unique needs with an advisor who specializes in the unique needs of dentists and specialists. They may suggest that you combine your term life insurance and permanent life insurance policies to meet your coverage needs.
Learn more about term life insurance coverage for dental professionals.
About Treloar & Heisel
Treloar & Heisel, an EPIC Company, is a premier financial services provider to dental and medical professionals across the country. We assist thousands of clients from residency to practice and through retirement with a comprehensive suite of financial services, custom-tailored advice, and a strong national network focused on delivering the highest level of service.