Is Re-Entry Term an Affordable Option for Life Insurance?

Upon first inspection, re-entry term life insurance may seem like an attractive option for certain groups of people.

In a nutshell, re-entry term life provides two different premium schedules and charges a lower premium based on mortality rates. For a younger person in excellent health, re-entry term can provide an affordable option for life insurance.

“It gives the customer the option, with additional evidence of insurability, to qualify for a lower premium than they would normally pay had they not provided additional evidence,” said David Theile, Director, Life/Health Product Management at State Farm.

The Social Security Administration offers the most recent mortality and life expectancy tables based on age.

The other side of the coin reveals a higher premium schedule based on mortality rates that are applicable 15 or 20 years after evidence of insurability. If you are in poor health at that time, you automatically have to pay a much higher premium.

The logic is that you pay lower premiums when healthy and higher premiums when unhealthy.

So then who is this policy right for? If you feel you are going to stay healthy well into your retirement years, it is a good choice. It should be noted that health usually starts to decline between 45 and 55 years old. If you suffered from poor physical health for several decades, you are going to pay a lot in premiums.

A good tip to keep in mind when considering buying re-entry term insurance is to evaluate whether a re-entry policy is more cost-efficient than other insurance policies. It is recommended you first compare its premium costs to the highest premium rates of other similar types of coverage.

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