Is Term Life Insurance Right For Me?

March 1, 2018

 

Choosing the right type of life insurance can be a little overwhelming sometimes if you're not familiar with the different types and what the benefits are for each type. 

 

Term life insurance is one of the most inexpensive types of life insurance that has great benefits. Term means length of time. For instance you can buy a 30 year term policy to cover you for 30 years. The benefit of buying a 30 year policy is that your premium will not increase over the length of the term. If you choose to renew the policy after the term ends the premium will be higher obviously because you are 30 years older than you were when you purchased it. This is a great way to get the coverage you need inexpensively for 3 decades.

 

If you were to purchase a 10 year policy the premium would be cheap but when you go to renew it after the 10 years the premium will be higher because you are 10 years older than you were when you purchased it. So buying a 30 year term policy may be the best way to go to save money and get the coverage you need.

 

Why buy Term instead of Permanent Life Insurance?

Buying term life insurance is a less expensive way to get a high amount of coverage. Permanent life insurance is a great way invest and to build wealth for long term. With a permanent policy such as Indexed Universal Life, your premium would be higher but the majority of the premium will go towards your savings and a portion of it would go towards your paying for the life insurance.

 

Ways to use Term Life Insurance

 

Home Mortgage - term life insurance is a great way to make sure your mortgage on your home will be paid if you were to pass away. This will give you and your family peace of mind knowing that they won't be at risk of loosing the home if they can't afford to keep the mortgage payments going if you are the primary breadwinner and your income were no longer being provided. The life insurance company would send a check to your beneficiaries and they would be able to pay the mortgage instead of having to sell the home. At the time of time of grief, most people are not in the right mind to have to deal with selling a home or trying to come up with mortgage payments.

 

Example: if the balance on your mortgage is $500,000 you could purchase a $500,000 term policy. If the breadwinner of the family were to pass away the insurance company would write a $500,000 tax-free check to the beneficiaries. The beneficiaries can then pay off the balance of the mortgage.

 

College Tuition - term life insurance can be used to pay for college tuition if the breadwinner were to pass away. 

 

Pay off Debt - term life insurance can be used to pay off debt if the breadwinner were to pass away.

 

Family Income - term insurance can be used to give your family an income if you were to pass away. When purchasing a term policy you would determine the number of years that you want your family to receive the income that you are normally providing. 

 

Example: if your annual income is $100,000 you would multiply $100,000 by the number of years you want your family to be able to sustain the same lifestyle that they are living with your current income. eg; $100,000 x 5 years = $500,000 of coverage. (This is just and example. The number of years can be any number that you decide).

 

Living Benefits - You don't have to pass away in order to receive the death benefit. Some life insurance companies provide living benefits with their term life policies. These living benefits can include Critical Illness, Terminal Illness and Chronic Illness.

 

This means that if you had a term insurance policy that included living benefits and you all of a sudden become terminally, critically or chronically ill the insurance company would write you a check for an amount determined by your coverage amount and policy terms. 

 

Example: if you have a $500,000 policy and you became critically, terminally or chronically ill the insurance company would write you a tax-free check for the coverage amount. This money can be useful to pay medical expenses. It's up to you what you use the money for.

 

 

SUMMARY

 

Term life insurance can be used in many different ways. You don't have to pass away in order to take advantage of the death benefit if you have a term policy with living benefits. The funds that the life insurance company sends to the beneficiaries are tax-free and not considered an income.

 

To learn more about life insurance or to get a quote please visit our website.

 

 

 

 

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