Benefits of Term Life Insurance
Term life coverage is used to cover the life of a person for a specified period of time. It is especially useful for income replacement of the wrongful death of an individual. There are several benefits to a term life insurance policy that many make it a better choice than whole life insurance. Generally, term policy payouts can range from 100,000 to multi-millions. Ultimately, you will need to select a life insurance policy that meets your individual needs and the needs of your family. Below is a list of the benefits of term life insurance to help you achieve peace of mind.
Advantages of Term Life Policies
Affordable – The primary benefit of term life insure is affordability. The cost of term life insurance is substantially lower than whole life insurance policies. The reason for the lower cost is that a payout is far less likely over a specified period of time. In contrast, a whole life policy will always be paid at face value, but typically only covers the end of life costs of the deceased person.
Large Payouts – Compared to whole life, term life insurance policies generally have a much higher payout to the beneficiary. Insurance companies are able to structure term life insurance plans this way because it is unlikely a claim will be filed during the term.
Flexible Terms - With term life insurance you can build terms that fit your needs. You get to set the time period it will cover and the amount of the payout in the event of wrongful death. This makes it much easier to find a plan that can be built to fit your budget.
When to Buy Term Life Insurance
Starting a Family – Having kids brings a load of new financial responsibility. Term life insurance can be used to protect your children financially in the event of wrongful death. Someone will need to pay for school expenses, food, clothing, and housing if your income is suddenly gone. Having this assurance for your loved ones could be vital to their future. In most cases, term life is affordable and will only require minimal monthly payments.
Buying a Home – Many families use term life insurance to cover the length of a mortgage. For example, if you buy a 200,000 home on a 30 year mortgage, it is wise to purchase term life insurance to cover the length of the mortgage. If you drop dead, your family will not be stuck with the burden of the mortgage debt.
Getting Married – If your spouse’s income is not sufficient to cover all monthly bills, term life insurance can help. Your policy can be arranged to cover any type of debt. Newlyweds typically have a great deal of debt, so you can use term life insurance to protect your spouse and household. This will cost your family far less than other life insurance alternatives.
Tips and Advice
Compare Quotes – The payment rate for identical coverage can vary by as much as 60%. Make sure to use a quote and compare service to find the very best rate for your term life policy.
Do Not Underinsure – Make sure you purchase enough insurance to meet your basic needs. One of the main pitfalls with insurance is buying less than you need, which can land you in hardships that lead to bankruptcy.
Learn More about Term Life Insurance
- Benefits of Life Insurance
- Benefits of Whole Life Insurance
- Benefits of Universal Life Insurance
- Benefits of Insurance
We hope you learned more about the benefits of term life insurance.