Introduction:

Selecting the right life insurance policy requires a thorough evaluation of its features and financial implications. In this blog post, we will conduct a comprehensive financial comparison between Banded Term Life Insurance and a Term Life Express policy offered by a major insurance company. By examining the costs and policy features, we aim to provide a clear understanding of the advantages and limitations of each option.

Banded Term Life Insurance: Cost and Coverage Analysis

Let's begin by analyzing the costs associated with Banded Term Life Insurance for a 55-year-old male non-tobacco user seeking $50,000 in coverage until age 75. The following age bands and premiums apply:

Age Band | Premium | Total for Band (Premium x 60 Mo.)

55-59 | $65 | $3,900

60-64 | $94 | $5,640

65-69 | $128 | $7,680

70-74 | $184 | $11,040

Effective Premium and Total Cost:

Calculating the effective premium by dividing the total premium by 240 months, we find that the actual cost of the $65/month policy amounts to $117.75 per month. Furthermore, the total cost of insurance over the specified period adds up to $28,260.

Comparison to a Term Life Express Policy:

To provide a benchmark for comparison, let's consider a Term Life policy offered by a major insurance company. With a monthly premium of $61.81, the total cost of insurance for this policy would amount to $14,834.

Total Savings and Additional Features:

By comparing Banded Term Life Insurance to the Term Life Express policy, potential savings can reach $13,426 ($28,260 - $14,834). However, it's important to note that Banded Term Life Insurance may have certain limitations in terms of coverage and features.

Policy Conversion Options:

While Banded Term Life Insurance focuses on term coverage, the Term Life policy offers the advantage of policy conversion. After the second year, policyholders have the option to convert their term policy into a permanent policy until the end of the term period or the insured's 70th birthday, depending on which occurs first.

Riders Included with Policy Purchase:

The Term Life policy provides additional benefits through various riders, including:

- Accelerated Death Benefits for Chronic Illness: Provides an accelerated death benefit if the insured is unable to perform daily activities or requires substantial supervision due to cognitive impairment.

- Terminal Illness: Offers an accelerated death benefit if the insured's life expectancy is 12 months or less.

- Critical Illness: Provides an accelerated death benefit upon diagnosis of specific critical conditions.

- Residential Damage: Waives premiums for the base policy and riders for a single six-month period if the insured's primary residence sustains at least $25,000 in damage.

- Waiver of Premium for Unemployment: Waives premiums for the base policy and riders for a single six-month period in the event of qualifying unemployment.

- Common Carrier Death Benefit: Provides an additional death benefit if the insured dies in an accident while a fare-paying passenger on a common carrier.

Optional Riders:

Additional optional riders, such as Disability Income, Disability Waiver of Premium, Accidental Death, and Dependent Children's Coverage, may be available at an additional cost. Availability of these riders may vary by state and is subject to change.

Conclusion:

Banded Term Life Insurance may initially appear cost-effective, but when considering the overall financial implications and policy features, it's crucial to assess the long-term benefits and limitations. A simplified issue Term Life policy provides competitive pricing, conversion options, and a range of beneficial riders to enhance the coverage and peace of mind for policyholders.