To supplement an existing policy — Term insurance can be used to supplement the coverage of a permanent policy. For example, if $300,000 is the desired amount of coverage, it may be cost-effective to purchase a $100,000 permanent policy along with a $200,000 level-term policy. This blend would provide the necessary coverage at a lower premium than a $300,000 permanent policy. The permanent policy would earn cash value and, eventually, the level-term policy may be eligible for conversion into an additional permanent policy, without further evidence of insurability.
Limited funds are available — A family that cannot fit a permanent policy into its budget could select a term policy and later convert it to a permanent plan of insurance such as an ISP CHOICE or an Interest Sensitive Whole Life policy (ISWL). Term is often a popular choice for younger people who have big dreams and responsibilities, but limited income. A term policy offers the right amount of coverage at a premium they can afford, while protecting their insurability in the future.
For business needs — Business owners could utilize term insurance for many of the same reasons that individuals do — when a short-term need exists, when funds are limited and as supplemental coverage. In addition, small business owners could offer level term insurance coverage as an employee benefit to attract and retain good people.