The truth about term life insurance is that it can be complicated. There are a lot of different types of life insurance, and figuring out which type you need may seem impossible. However, we’re here to help! We’ve created this blog post to answer all your questions about term life insurance so you can make the best decision for yourself and your family.
What is Term Life Insurance and how Does it Work?
Term life insurance provides coverage for a specific number of years and pays out a death benefit should you pass away during the term of the policy. Unlike whole life insurance policies, term life is more affordable and provides a payout for your family.
When you buy this type of policy, you’ll need to decide how much coverage you need (how large the death benefit will be). To do this, you can use a “term life insurance calculator”. You can buy a higher coverage amount, but be careful to not overspend on the coverage or you may end up paying more in premiums than what it would cost for permanent life insurance.
Why is term Life Insurance Essential?
Term life insurance is an important financial security measure. It provides coverage for your family’s needs in the event of death, and it offers peace of mind that you have done all you can to protect your loved ones from unforeseen circumstances.
Term life insurance is also a simple, affordable way to provide income if you are unable to work because of illness or injury. It’s important that you have the coverage in place so your family won’t be burdened with debt and cost of living expenses on top of their grief. If they don’t have term life insurance (or any other form of life insurance), they will need to find an alternate source of income which is not always possible.
Types of Term Life Insurance Policies:
The two types of term life insurance policies are level-premium term life insurance and decreasing term life insurance.
Level-Premium Term Life Insurance
With level-premium, the policy’s monthly payment stays constant over a certain number of years. The downside is that your family may not receive enough money if you pass away midway through the plan. However, level-premium policies are often less expensive than decreasing term life insurance policies.
Decreasing Term Life Insurance
Decreasing term is like level-premium in that the policy’s monthly payment also stays constant over time but instead of paying a lump sum upfront, you are paying smaller and smaller amounts with each passing year until your coverage expires at which point your coverage and payments end.
What to Consider when Buying a Term Life Insurance Policy?
It’s important to shop around when buying a term life insurance policy. Every company has different rates, so you’ll want to compare the policies of various providers before choosing one for your needs. You can get life insurance quotes online or over the phone from many companies at once without leaving home! All you need is some information about yourself (age, gender, date of birth, etc.) and then any other information you have about your financial needs.
Once you get quotes, it’s important to compare them side-by-side so you know which policy is best for your individual situation. You’ll want to look at the cost of monthly premiums in relation to how much coverage they provide and see if any policies offer discounts or special features like automatic payment from a bank account, a rider for coverage of pre-existing conditions, or discounts for buying multiple policies.
The Bottom Line
It’s important that everyone understands how much term life insurance they need in order to provide their families with financial security and peace of mind should something happen to them. It can be daunting trying to research this on your own–but luckily there are plenty of resources and financial advisors like Dundas Life available.