Term Life Insurance
From LoveToKnow Insurance
For many people, term life insurance is the most sensible and least expensive way to provide for their family.
Life Insurance Basics
In today’s high cost society, life insurance is a necessity to maintain a family’s quality of life if one of the breadwinners dies suddenly. Although no one likes to think about this happening, planning ahead can save your family hardships and financial struggles.
Life insurance provides your family and beneficiaries with the financial means to cover medical bills, funeral costs, pay off a house or other property, secure a child’s education, and eliminate any outstanding debts you may owe at the time of your death. More valuable than the financial benefits is the peace of mind that life insurance provides your family or loved ones.
Like medical insurance, life insurance policies are based on a number of factors, such as your medical history, station in life, and your income and debts.
What is Term Life Insurance?
Term life insurance means that your insurance policy is only good for a certain amount of time, usually anywhere from one to thirty years depending on the coverage you choose. Whole life insurance, on the other hand, is in effect from the day you sign up for coverage until you die or cancel the policy. Once term life insurance expires, you can usually renew it for another term, shop around for another policy, or switch to whole life insurance.
Each insurance company offers their own type of policies and options, but some of the most common term life insurance programs are:
- Level: This insurance covers you for a set period of time, usually 10, 20, or 30 years. The amount of coverage stays the same for the duration of the policy, so your family would receive the same benefits during the first year as the last. With some policies, your monthly premiums may go up.
- Decreasing: Just like it sounds, the value of a decreasing term policy goes down over time. However, you will typically pay the same amount each month in premiums even though the policy decreases. This policy is usually bought by individuals who have a lot of upfront debt that they want to protect their family against.
- Yearly Renewable or One Year: This insurance covers the carrier for only one year, but can be continued on a yearly basis, usually with the same conditions. This can be a good idea for individuals who need life insurance coverage, but are not ready to make a long-term commitment to a policy. It may also be good for those who have large, short-term debt.
Purchasing Term Life Insurance
Before signing on the dotted line for what could be a lengthy relationship, make sure you are getting the right coverage. Not all term life insurance policies, or the companies that offer them, are valid in every state. Check with your state’s insurance department to find out which policies are applicable in your area.
Many of the country’s largest insurance providers, including Metlife, State Farm, and Nationwide, offer term life insurance policies. If you are working with a smaller insurance company or are not sure about the reliability and history of an insurance provider, you can research the firm through reporting companies like Standard and Poor’s or AM Best . Accessing some of these reports may cost you a small fee, but can give you greater peace of mind.
You can also get a jump-start on learning about term life insurance through online calculators. By answering a few questions about your age, health, and financial obligations, you can get a free quote from most of the major insurance carriers. This quote will give you a good idea of how much insurance coverage you need and how much it will cost. It may also help you decide what type of policy is best suited for you.
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