Although not very popular, the 5 year term life insurance policy is a term life insurance policy which has been around for some time. It has a low premium. That’s probably why insurance agents don’t aggressively market this policy. Low premium means low commission for the agents. Another reason why it is not popular is 5 years is generally considered a very short period of time for ownership of a life insurance policy. If you are thinking of buying life insurance, don’t overlook this policy. It might be the right policy for you depending on your needs.
The 5 year term life insurance provides life insurance protection where the face amount of policy remains level for the first 5 years and so does the premium. It is an affordable form of life insurance. However it only provides pure insurance protection and has not investment value. It does not accumulate cash value, nor is it eligible for dividends. But if you are looking for coverage for a well-defined period of time, this policy will fit your requirements. If you find it necessary to take out a loan for a short period of time a 5 year term life insurance policy on your life can assure the lender that if you should die before the loan is repaid they will get back their money. After the first 5 years, some insurance companies allow you to extend the policy beyond the initial 5 years but you will have to pay a higher premium. The initial policy can also be converted to permanent insurance in the future. A 5 year term life insurance provides affordable temporary life insurance protection with guaranteed death benefit, generally free from federal income tax. You can also convert all or part of the policy to permanent cash value insurance, without having to furnish evidence of insurability, or proof of your good health. Permanent insurance builds cash value and is eligible for dividends. You can also add riders to your 5 year term life insurance policy. If you have a premium rider waiver to your 5 year term life insurance policy, the insurance company will take over the payment of premiums for you if you become disabled. If you become disabled for at least 6 months, the insurance company will pay your 5 year term life insurance premium for you even if your disability lasts for the rest of your life. If you add a double indemnity rider, the life insurance company will pay to your beneficiary twice the face amount of your policy if die in an accident.
A 5 year term life insurance is perfect for you when protection is essential but you cannot afford to spend huge amounts. Young people in the 20’s and 30’s can purchase a 5 year term life insurance and later convert it to a permanent plan.
