Term Insurance Solutions
What’s it good for?
Life insurance provides a financial safety net for your beneficiaries think about what would the financial future look for your partner, family or business partner if you passed away? But with so many options, do you know which type you need?
Buying term life insurance? Here are the facts about term insurance, plus common features, definitions and shopping advice you will need to know before you purchase.
Term life insurance was established to provide much needed funds upon your passing. It provides a tax-free payment to your family or to whom every you have named as beneficiary on your policy. Term life insurance is affordable and straightforward and is the right choice for most people looking for insurance. some of the biggest names in personal finance, like Dave Ramsey, Suze Orman, and Clark Howard agree and recommend term life insurance as part as any sound financial plan. But that doesn’t mean it’s right for everyone.
As a licensed family life insurance expert I can help you figure out which type of term life insurance is best for you, but you can also ask yourself a few quick questions about the needs of yourself and your family:
- How much can I afford to pay each month for life insurance? If budget is a concern, then term life insurance is your best option, as it’s the cheapest.
- Do I expect to self-insure in the future? If you go with term life, you need to be OK with your coverage possibly running out and you’ll need to be self-insured by that time.
- What are my goals for my life insurance? If you just want to cover expenses such as a mortgage or other types of debt then term is ideal.
- What are my goals for my life insurance? If you just want to cover expenses such as a mortgage or other types of debt then term is ideal.
By asking these questions, and knowing how term insurance address each of them, you can make the right choice for yourself and your family.
What is Term Life Insurance?
TTerm life insurance is a form of life insurance that lasts for a set number of years known as the term. If you die before the term is up, your beneficiary usually your family receives a tax-free lump sum of money that can be used for funeral expenses, to pay bills, or for any other use. The key definition when it comes to term life is the word term (how long the policy until it renews).Term periods usually last anywhere from 10 to 35 years, and you pay a monthly or annual premium during this time to keep the policy active. The term length, premium amount, and death benefit are all outlined in the policy when you sign it. In general, the premiums are made more expensive by longer term lengths and larger death benefit.
Term life insurance cost are determined by:
- Your health. The more likely you are to die while the policy is in force, the more expensive the policy will be. For this reason, older applicants, unhealthy people, people with a family history of conditions like diabetes or cancer, and those who engage in risky work or hobbies are charged more.
- The death benefit. The larger the death benefit amount, the more you’d pay for the policy.
- Term length. The longer the policy is to be in force, the more expensive it’ll be. This is part of the reason permanent life insurance is more expensive than a comparable term policy: the “term” lasts your whole life.
- Riders. Adding certain riders to change the stipulations or parameters of a policy may make it more expensive.
It is extremely important to ensure that your term policy includes the option to convert. A convertibility option is included in most term policies and ensures that you have access to change your term policy to a permanent policy without having to do a medical. This is especially important should you develop a health issue after you purchase your term life insurance policy.
What’s a good price for term life? The answer varies and depends on what you can pay to keep it in force; on average term life insurance premiums for a $500,000 policy for someone in their mid- to late 30s is just over $26 a month. It can be as low as $20 for someone in their mid-20s to as much as $99 for someone in their 50s.
How much term life insurance do I need? Remember one of the main benefits of term was the affordability (there’s no point in having a policy that you won’t be able to pay for) while still making sure your family will be able to cover their financial needs. When deciding how much term life insurance you need, you should take into account:
- Outstanding debt, like a mortgage
- Future college costs
- Dependents, including children and aging parents
- End-of-life expenses for yourself
- Any financial cushion your family might need