Term life insurance can be utilized in a number of different situations such as locking in your ability to be insured, in coordination with a Whole Life Laddered Strategy, and Estate Planning.
Lock in your ability to be insured!
Maybe you're young and starting a family, recently married, or just purchased a home. Expenses may be high as you grow your family and your career, but one thing you have going for you is your as healthy now as you'll ever be in your life and right now you'd qualify to a preferred health rating on a life insurance policy. The most affordable strategy to protect your family is to purchase a life insurance policy that you can convert later to a permanent policy. Keep in mind, not all insurance carriers are the same and some of those companies that you could potentially purchase term insurance wouldn't be worth converting to permanent later - make sure you work with a professional to find the best policy for future use. Also, some carriers will over Extended Conversion Riders to extend the time period that you're able to convert to a permanent insurance policy. The best part of this strategy is even if your health has deteriorated later in life, you'll be able to convert the policy with no underwriting and they'll issue the permanent policy at your health rating back when you were younger and took out the Term Life Insurance policy.
Whole Life Laddered Strategy
A strategy that many insurance agents are not familiar with and do not have the experience to accurately coordinate is a Whole Life Laddered Strategy. In this strategy you can ladder multiple term policies of 10, 15, 20, and 30 year Level Term Life Insurance policies in coordination with a Whole Life Policy to achieve a desired death benefit over a period of time. This strategy will save you a great deal of money and will allow you to still retain the desired benefit.
Most agents and attorneys will tell you that when it comes to estate planning strategies and life insurance - you should only use permanent insurance. This is not quite true. GWSP would agree that in many cases a permanent policy is better suited for estate planning because you need to be confident that the policy will be there when you need it. However, a common circumstance that is an exception to this is planning for an incoming inheritance in the future. The family purchases a trust owned term insurance policy for a cheaper premium and after the inheritance is realized they convert the policy to a permanent policy.
I'm busy working on my blog posts. Watch this space!