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With Laddered Term Life Insurance, you can own one policy that includes different term lengths and different death benefits. As an example, you can purchase a $1,000,000 30 year level laddered term life insurance policy that includes a rider for a 10 year level term life insurance policy for $1,000,000, and a 20 year level term life laddered life insurance policy for $1,000,000. In total, the policy would provide $3,000,000 of life insurance death benefit for years 1-10, $2,000,000 for years 11-20, and $1,000,000 for years 21-30.
Example #1: Young married couple with children
• Married couple with two young children and a mortgage. Only the 35-year-old husband has a salary from full-time employment.
• They are looking for a life insurance plan that will protect their financial interests if the husband should die.
• They want an affordable plan that will pay the mortgage, let their kids go to college and provide the money they’ll need to continue their accustomed lifestyle.
• In today’s world of term insurance, they have three options: buy a plan that covers the full need for the entire time they want to be protected, or buy four separate plans with specific face amounts and durations, or buy a base plan with riders that address coverage needs that won’t exist sometime in the future.
Solution:
• Buy a Laddered Term Life Insurance term base plan with one or more term riders. At Legal & General America (Banner Life) this is the lowest cost option for the full coverage the couple needs now. See an example on page two that shows savings of 11-13%.
• “Ladder” the riders so there is appropriate coverage for each of their predetermined needs.
• Coverage for stay-at-home spouses is also available up to $1 million, but all coverage amounts can be considered on an individual case basis.
How it works:
• TheLaddered Term Life Insurance base plan stays in force for the longest period of time. In this case, to cover the couple’s income replacement needs.
• Individual riders have face amounts tied to specific needs, like mortgage payoff or college tuition. The rider durations are based on how long those needs will exist.
• TheLaddered Term Life Insurance coverage expires at the end of the rider term period—for example when the couple anticipates the mortgage will be paid or the kids will have graduated.
• When the rider coverage expires, the total coverage is less, and future premiums are lower.
• The cost per $1,000 of coverage is the same on the base plan and on the riders.
Benefits:
• The individual gets full coverage now at an affordable price.
• The Laddered Term Life Insurance approach saves money because there are no policy fees on the riders. Other companies would require multiple policy fees. This can add unnecessary cost.
•Laddered Term Life Insurance Billing is consolidated making for easy payment.
• Premiums drop after each rider expires.
• Multiple riders of shorter durations can be laddered.
• Riders are separately convertible while in force.