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 Posted: Sat May 02, 2009 5:41 am Post subject: buy a 10year term and stop after 5 years |
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| I want to buy a 5 year term life insurance. But the brokers I have contacted told me that I can buy a 10 year term life insurance and stop after 5 year by myself. I just don't pay it at that time. So is it really possible? Are the insurance company going to sue me or give me some penalty at that time? Thanks in advance! |
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uclach
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| Posted: Sat May 02, 2009 6:05 am Post subject: |
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I agree with the fact that there are some of the insurance companies which do offer holiday period in premium but not sure whether it is really up to 5 yrs or not!
I think this could be some trick. |
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DanielC
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| Posted: Sat May 02, 2009 4:15 pm Post subject: |
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A lot of times the 10 year term would be cheaper. The only other question I have is....What is the difference that the agent makes in commission. With some companies, the 10 year will pay higher commissions and could be the reason for the suggestion.
However, if the rates for a 10 year policy are cheaper than the 5 year policy, then go for it!
To answer your other question...no, there would be no kind of penalty whatsoever.
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TRK3031962
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| Posted: Sat May 02, 2009 8:58 pm Post subject: |
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Just to clarify, most 5 year, 10 year, and 20 year policies are not 5 year, 10 year, or 20 year policies. They are all actually annually renewable term policies in which the premium stays level for a number of years. After the initial level period, the premium goes up annually.
They can all be cancelled at any time. 5 year policies are often more expensive than 10 year policies. It doesn't make much sense, but this is probably because not many companies sell 5 year policies, so they aren't competetively priced.
The cheapest policy for someone who wants coverage for a short period of time, like 5 years, is an annually renewable term policy that increases in cost every year from the very first year. |
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InsuranceExpert
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| Posted: Sun May 03, 2009 3:05 pm Post subject: |
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But still the mystery remains intact about the fact that whether there is any policy where one just need to pay for the 5 yrs and still he can avail the benefit of the policy for total 10 yrs.
really need some investigation.  |
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kundatamboli
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| Posted: Sun May 03, 2009 3:23 pm Post subject: |
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| There's not a mystery about this. It can certainly be done with a universal life policy. |
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InsuranceExpert
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| Posted: Mon May 04, 2009 8:33 am Post subject: |
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Hi Expert, I think with the term life policies coverage remain available as long as you stay current with the premium payment.
| Quote: | | There's not a mystery about this. It can certainly be done with a universal life policy. |
Yeah, but the OP here has bought a term life plan and not universal life. |
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kelvin
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| Posted: Wed May 13, 2009 3:02 pm Post subject: |
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| hi, there are policy starting with terms 5/10/15/20, if you looking as an investment option try ULIP, invest in balanced or debt fund or as market is down now a day invest in equity. wait for 5 year check fund value and withdraw fund with nominal or no charges. and if you feel returns are not good you can take premium holiday for next 2 year and withdraw funds with absolute no charges. |
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goldenjobs
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| Posted: Tue Aug 04, 2009 8:15 pm Post subject: |
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This is a simple case of somebody not being familiar with how a term policy works. The brokers you contacted gave you the perfect information. If you want 5 years of simple life insurance coverage, just buy a 10-year term policy and stop paying it when you want the coverage to end.
If you buy a 10-year term policy it is not guaranteed to last 10 years. It will only last as long as you keep paying it. You can stop paying it any time. There are no penalties for stopping payment except for the obvious result that your coverage will end. I think some people here got a bit carried away and missed how simple this question really was.
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explain this
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| Posted: Thu Aug 06, 2009 5:20 am Post subject: |
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This person has it exactly right!
"If you buy a 10-year term policy it is not guaranteed to last 10 years. It will only last as long as you keep paying it. You can stop paying it any time. There are no penalties for stopping payment except for the obvious result that your coverage will end. I think some people here got a bit carried away and missed how simple this question really was."
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mkortz
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| Posted: Thu Aug 06, 2009 5:22 am Post subject: |
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explain this said:
| Quote: | | There are no penalties for stopping payment except for the obvious result that your coverage will end. I think some people here got a bit carried away and missed how simple this question really was. |
Thank you. Well said. Great answer and please keep contributing.
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InsTeacher
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