What Is No Load Term Life Insurance?
In the world of life insurance, there seems to be an endless supply of new variations on an old concept. The insurance companies have stretched themselves to provide a product that is innovative and appeals to an entirely new group of individuals. The traditional varieties of term and whole life insurance are certainly still the most prevalent, but more and more variations of the old standby are popping up. One such product variation is called no load term life insurance.
Whether the insurance companies are continuing to innovate to help their product appeal or they simply have grown tired of selling the same old product, there are countless combinations of the different product types. If you don’t believe me, take a look at the life insurance category of this site. And this barely scratches the surface.
So What Then…Is No Load Term Life Insurance?
No load term life insurance is simply a term life insurance policy with a couple of core changes to the product. What you have learned in the past about term life insurance will continue to hold true. In fact, most of the variation on this product will be relatively indistinguishable from other insurance types.
The term insurance portion of the no load policy will continue to provide risk coverage for the course of the contract. Like other term insurance the life insurance is established to provide coverage on the owner for a set period of time, or the term. To continue coverage, many policy holders will purchase renewable term life insurance, which allows them to extend the contract beyond the initial date.
There are several reasons most people buy term insurance. The primary two reasons are that they are either only anticipating needing coverage for a short time period or they are trying to save on the cost of the premium payments. Term is typically less expensive than whole life insurance in the first couple of years.
The no load portion of no load term life insurance policies is in regards to the fees associated with the account. A standard insurance contract will often bulk in a commission payment to the agent that sells you the contract. There are also annual fees that the insurance company writes into the policy. Often the quote given by the insurance agent is for the cost of coverage. This is a measurement of your risk category, age, and life expectancy. The final cost of the insurance is a combination of this number and the annual fees.
When you purchase no load insurance, you are more or less purchasing a contract that has eliminated or reduced the annual fees and agent commissions. This allows for the premium to be lower than it normally would have.
There is a misnomer here however. The no load term life insurance is not really no load; it is more accurately low load insurance. In exchange for your agent not accepting a commission on the sale of the contract, you will typically have to pay an upfront fee to the agent. The fee is prearranged and managed by the insurance company, so you don’t have to worry about being taken advantage of by a crooked agent (though you should always be alert).
Advantages of No Load Term Life Insurance
The primary advantage that has already been discussed is the fact that no load policies will typically have a lower premium payment than other insurance policies. The agent commissions and some of the annual fees have been removed from your required payments.
The next advantage that is also a direct result of this type of contract is that your account values will accumulate faster. The account value will see bigger increases year to year, meaning your premium payments make it back into the policy faster than otherwise. This can be a very real advantage to your portfolio.
As with all insurance products, be sure that you do your research before jumping into any one form of insurance. Each insurance product is designed for a specific purpose. Be sure that your intended use makes sense both by way of coverage and by way of your financial plan. Always check that you have received the best no load term life insurance quote that you can. The only way to find the right insurance is to shop around for it.
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