When an insured dies the full face amount of the policy, or an income derived from the face amount of this policy, is paid out to the beneficiaries. If you have ever seen the devastation which overcomes a family when the breadwinner dies you will appreciate the value of a life insurance policy like the 30 year term life insurance policy we are discussing. Let me tell you a little story which illustrates a situation where disaster was avoided through timely planning.
About 17 years ago, I took a friend of mine to lunch, over which we discussed his life insurance needs. I took all the necessary information and did a Capital Needs Analysis for him and the following week he bought $1,400,000 of 30 year term life insurance as a temporary measure. A year and a half later he died in an automobile accident. This accident was no fault of his.
Two days after the accident I visited his family, with the intention of assisting them in any way I could. His wife, when I entered the house, was standing over the sink washing dishes. We embraced each other as I attempted to comfort her. I must stress that there is nothing that can relieve the emotional burden of a wife who sincerely loved her husband when he dies suddenly.
When I was ready to leave I handed her a check for $30,000, to tide her over until the estate went through probate...and was settled. I have never before, or since, seen such a dramatic change in the demeanor of a human being in my life. You see, she did not know that her husband had bought that 30 year term life insurance policy. She explained that she did not know what she was going to do. They had two children ages 9 and 12. It was her firm belief that she should stay at home and raise her children if she could afford to do so.
This wife was able to do the things she needed and wanted to do because her husband cared enough to buy this 30 year term life insurance policy. Together with other life insurance policies on the husbands life there was sufficient principal to provide an income for herself and her children for as long as she lived. This friend of mine is working outside the home now but...not because she has to. She is working because she wants to.
With some 30 year term life insurance policies the premiums remain level for the entire 30 year period...thereafter the premium increases every year. In order to keep the policy after the initial 30 year period some life insurance companies may require additional evidence that the applicant can still qualify... a medical examination.
With some policies, during the first 30 year period, the premiums are increased every year 5 years or 10 years. With the better companies the premiums remain level for the duration.
These policies can be used to take care of family needs like in the above described situation. They can also be used to to pay college costs, to pay off outstanding debt or to fund a buy sell agreement. 30 year term life insurance is also used for key employee life insurance.
So, if you are looking for a cost effective life insurance policy that you can keep for a longer period of time than the average term policy 30 year term may be your solution.
