Term Life Insurance is a life insurance that provides a death benefit to the beneficiary if the insured dies during the term of the policy. It is called term life insurance because policies are sold in blocks of time (the term) such as 10, 20, or 30 years. At the end of the term, the policy expires and may or may not be renewed by the insurer at rates according to the age of the insured at the time of expiration.
Term Life insurance is very inexpensive, especially when compared to Whole of Life insurance. Term rates are much lower for several reasons:
- The policy period is not for the lifetime of the insured.
- The policy does not build any cash value.
What is Term Life Insurance Used For?
Since the rates for Term Insurance are so affordable, this policy is widely used for young families who have created substantial debt resulting from home purchases. The policy is best suited for debt payment, income replacement for surviving family memebers, and funding college tuition.
Who Might Buy Term Life Insurance?
Consumers who purchase term insurance are typically looking for life insurance benefits in large amounts. Since the term insurance rates are very affordable, it’s the perfect solution for individuals and families looking for a lot if insurance at the most affordable rates.
How Much term Life Insurance Should I Purchase?
How much insurance you purchase is based on your individual insurance needs. This can be determined by using a process known as “needs analysis” which can be calculated by your Trusted Union insurance advisor . This calculation takes into consideration all of your debt, expected college tuition for your children, monthly living expenses, and income replacement. Even if you cannot afford the total of your needs analysis, you will be better off purchasing as much insurance as you can easily afford.
Should I Purchase Term Life Insurance for my Partner or Spouse?
Even if your partner or spouse does not contribute income to the family expenses, having a suitable amount of term life insurance is a good idea. With most term policies, the company will allow for an additional insured to be added to your policy for an amount up to the benefit you are applying for.
Should My Benefit Level Change Over Time?
Your debt and replacement income needs will typically be reduced as time goes by. As such it makes sense to have your have financial needs reviewed by a licensed and reputable insurance broker.
What Types of Term Life Insurance Are Available?
Term insurance is available with a level benefit (benefit remains the same), decreasing term (benefit decreases over time), and annually renewable benefit (one-year renewable policy). Your broker will help you select the benefit that will best meet your needs based on your individual situation.
Term Insurance can be the perfect solution whenever a large death benefit is needed at very affordable rates. For further information and policy details. Contact your Trusted Union insurance advisor to get the information needed to make an informed decision.