When you buy a term product you generally have two options: either you’re buying mortgage insurance and the term is tied to the borrowing term of your mortgage; or you’re stuck with a bevy of options set by your insurer (10 years, 20 years).
But life obligations don’t fall nearly into set terms. You could buy a 20 year term but only really need the coverage for 13 years. And of course, buying less than what you need isn’t helpful either.
Industrial Alliance’s Pick-A-Term plan is thus a pretty unique offering, letting you decide what terms you want, rather than what your insurer is willing to offer.
The Details of Pick-a-Term
Pick-a-Term is rather simple in concept, though its applications put it far and ahead of traditional term life insurance plans in that it’s “made to match”. You can take out a plan fitting the exact length of term you want, anywhere between 10 and 40 years (most insurers never offer terms beyond 30 years).
Rates are guaranteed when you apply, no matter how long the term is, which gives it a cost advantage over term plans that are continually renewed over and over.
This creates a great deal more gradiency when it comes to planning insurance as part of a greater financial strategy to secure debts or ensure a family has a proper income replacement in force. Rather than be subject to uncertainty over whether or not a policy warrants renewal or how long a renewal needs to be.
Of course, there are some other features worth nothing for Pick-a-Term. Some are similar to other term plans, some are unique:
- You still can convert, at any time, to a permanent life insurance plan without a medical exam;
- However renewals longer than your chosen terms are renewed on an annual basis, meaning there’s significantly more paperwork and hiking costs than if you renewed a standard term.
- This plan has no riders, so additional insurance needs to be purchased under a secondary policy.
Considerations Before Choosing Pick-a-Term
Before you get too excited, there are a few cases working against Pick-a-Terms flexibility that are worth consideration if you’re thinking about making the leap to buying a flexible term life insurance plan.
- This plan is less transferable than standard term policies. With year-to-year renewals, you have to get the term you need right off the bat, as renewals are expensive.
- For that reason, this plan is less flexible when applied to a financial strategy that requires accommodating changing needs.
- Generally any plans over 30 years should require that you first consider permanent life insurance, which could be more cost effective.
- Finally, the level cost and level coverage is useful, but not many people are going to need a level coverage for that long of a period of time.
For those who need extended coverage on exact terms and who are willing to plan their financial strategy ahead of time, Pick-a-Term is an excellent accommodation that provides a great deal of flexibility. For those who expect their needs to change over time or simply can’t predict what their insurance needs will be in the future: there are probably plans that are better designed for that than Industrial Alliance’s Pick-a-Term life insurance.