Term Life Insurance

Lots of different life events can trigger a search into life insurance options. It could be a marriage or the decision to start having children. As the primary earner in your family, you will likely want to make sure that your spouse or dependents are protected and taken care of financially should something happen to you.

If you have recently started looking into different life insurance options, you might have heard about term or whole life policies. While they both offer a lump-sum payment called a ‘death benefit’ to your listed beneficiaries after the insured dies, the amounts and types of coverage vary. If there are no surviving beneficiaries, the money goes into your estate and goes through probate in accordance with local laws.

What is Term Life Insurance?

While permanent life insurance, sometimes called ‘whole life’ insurance, offers “better” protection, it’s not always the best choice for everyone.

Term life insurance is a great option for those who see the need for life insurance but are looking for a more affordable option. Term Life Insurance works just like Permanent Life Insurance except it is only effective for a specific period of time. For example, if you bought a 15 year term life insurance policy and it hasn’t paid out, it will expire at the end of those 15 years. At that point, you would have the option of renewing your coverage. But be warned, if you develop some kind of chronic medical condition in the meantime, you may not be able to qualify for further coverage.

However, even if you don’t qualify for further coverage, all is not lost. Many Term Life Insurance policies come with a Return of Premium option that you can purchase for an additional premium. If you choose this option, all of the premiums you paid to the insurance company will be returned to you should you outlive the policy term.

Is Term Life Insurance right for me?

Term insurance is a great option if you are looking for a life insurance policy that is more affordable or if you only need temporary protection. Perhaps you only need life insurance to ensure a 25 year mortgage gets paid off or are only looking for protection until your children finished school. In these cases, there is no need to commit yourself to a more expensive whole life policy.

Another situation where Term Life Insurance is worth considering is if you’re young and relatively healthy. If you’re young and maybe don’t earn a ton of money but want some life insurance protection, a term policy is a more affordable option. You can get protection at a cheaper rate and since you’re young, you are unlikely to develop a medical condition that causes you to be ineligible for future coverage when your term policy expires.

How much insurance is enough?

Ideally, you’ll want to purchase enough life insurance to enable your family to maintain their quality of life without your income. If that is too expensive for you to reasonably afford at the time, you can consider purchasing enough insurance to tide your surviving dependents over for a few years with enough money left over for your spouse to train for a new career.

When is the best time to buy a Term Life Insurance policy?

The best time to purchase a life insurance policy is usually when you’re prompted by a major life event like marriage or the birth of a child.

Another great time to purchase is while you’re still young. Purchasing life insurance while you’re still young leads to cheaper premiums and takes away some of the downside of a term policy because you’re more likely to be health and therefore eligible for renewal at the end of your policy term.
If you’re still confused or would like to learn more about which option is right for your specific situation, contact us.