Keystone Financial Group
700 Taylor Rd, Ste 170
Gahanna, OH 43230

Term Life Insurance

Term life insurance provides life insurance coverage for a specific time period (the term). It is often referred to as pure insurance. The face amount of the policy is paid if you die during the term of the policy. When you live longer than the term of the insurance coverage, nothing is paid, as there is no cash surrender value.

Who should buy term life insurance?

Term life insurance is appropriate for situations when there is a high need for insurance but not much cash flow to pay for it. For example, a young family with limited cash resources may have a great need for survivor income to provide for living expenses and education needs. Term life insurance is especially helpful here, as it allows the family to buy the maximum insurance protection with minimal cash outlay.

Term life insurance is also well suited to cover limited-term needs, such as coverage during your working years until you retire, while your children are dependent on you, or for the duration of a loan or mortgage. Term life insurance is also used in business to fund buy-sell agreements and to provide coverage for nonrecurring business debt security and key personnel.

Advantages of term life insurance

Term life insurance is generally the most efficient way to achieve maximum life insurance protection for a minimum current cash outlay. When you are young and just beginning your career or family, you may have a need for insurance but not much cash to pay for it. With a term policy, you can buy a larger death benefit for less cash than you could get with any other type of life insurance policy.

Term life insurance is also pretty flexible. You can buy term insurance coverage for the time period that best suits your needs. Common term periods are 1 year with an automatic and guaranteed renewal each year (at a higher premium) up to age 95 in some states, or a level premium for periods of 5, 10, 15, 20, 25, or 30 years.

Disadvantages of term life insurance

The main disadvantage of term life insurance is that a term policy has an end point, like an expiration date. When the coverage period ends, you may have the option to renew the policy, depending on the specific policy and with limitations. But each time you renew the policy for an additional term of coverage or buy a new term policy, the rate increases because your age (and consequently the insurance company's risk of paying the death benefit) has increased. Eventually, the premiums can become quite high and difficult for people to pay. In addition, some states limit the age at which a person can buy life insurance. If you live in one of those states and want coverage beyond the allowable number of years (generally age 70), consider purchasing a permanent (cash value) policy such as a whole life, variable life, universal life, or variable universal life policy. Even if your state allows you to continue your term insurance policy to age 95, a cash value policy may, in the long run, be less expensive than a term policy.

Note: Variable life insurance and variable universal life insurance policies are offered by prospectus, which you can obtain from your financial professional or the insurance company. The prospectus contains detailed information about investment objectives, risks, charges, and expenses. You should read the prospectus and consider this information carefully before purchasing a variable life or variable universal life insurance policy.


Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, legal, or retirement advice or recommendations. The information presented here is not specific to any individual's personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Financial Planning and Advisory Services are offered through Prosperity Capital Advisors (“PCA”), an SEC registered investment adviser.  Registration as an investment adviser does not imply a certain level of skill or training. Keystone Financial Group and PCA are separate, non- affiliated entities. PCA does not provide tax or legal advice.

This communication is strictly intended for individuals residing in the state(s) of AL, AZ, AR, CA, CO, CT, DE, DC, FL, GA, IL, IN, IA, KY, LA, ME, MD, MA, MI, MN, MS, MO, NE, NH, NJ, NM, NY, NC, OH, OK, PA, RI, SC, TN, TX, VT, VA, WV and WI. No offers may be made or accepted from any resident outside the specific states referenced.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2020.