Midwest Life Brokerage Associates, LLC
1717 N. Naper Blvd. _ Suite 200 _ Naperville, IL 605463
Phone (630) 428-7640

What is Term Life Insurance?

Term Life Insurance provides for life insurance coverage for a specified term of years for a specified premium. The policy does not accumulate cash value. Term is generally considered "pure" insurance, where the premium buys protection in the event of death and nothing else.

There are three key factors to be considered in term insurance:

1) Face amount (protection or death benefit),
2) Premium to be paid (cost to the insured), and
3) Length of coverage (term).

Various insurance companies sell term insurance with many different combinations of these three parameters. The face amount can remain constant or decline. The term can be for one or more years. The premium can remain level or increase. A common type of term is called annual renewable term. It is a one year policy but the insurance company guarantees it will issue a policy of equal or lesser amount without regard to the insurability of the insured and with a premium set for the insured's age at that time.

Another common type of term insurance is mortgage insurance, which is usually a level premium, declining face value policy. The face amount is intended to equal the amount of the mortgage on the policy owner’s residence so the mortgage will be paid if the insured dies.

A policy holder insures his life for a specified term. If he dies before that specified term is up, his estate or named beneficiary receives a payout. If he does not die before the term is up, he receives nothing. In the past these policies would almost always exclude suicide. However, after a number of court judgments against the industry, payouts do occur on death by suicide (presumably except for in the unlikely case that it can be shown that the suicide was just to benefit from the policy). Generally, if an insured person commits suicide within the first two policy years, the insurer will return the premiums paid. However, a death benefit will usually be paid if the suicide occurs after the two year period.

Return of Premium Term Life Insurance

Return of premium life insurance is a type of term life insurance policy. The concept is that the policy returns the premiums you have paid for coverage over that fixed term period if coverage is never used. For instance, a $1 million policy bought for $50,000 (paid over a 30 year period) would result in the full $50,000 being refunded to the policyholder.

These ROP Term policies carry an extra cost of the policy compared to basic term life insurance policies. If you cancel the policy during the term, many current policies do allow prorated refunds at some point during the life of the policy, or no money is refunded to the PolicyOwner. Please make sure to check your life policy for the schedule of refunds.

	Midwest Life Brokerage
Kristopher T. Smith, President & CEO 1717 N. Naper Blvd. - Suite 200 Naperville, IL 60563 E-Mail: Kris@mwlb.com Phone 630-428-7640