A Term Life Insurance policy is a form of life insurance that provides a death benefit for a specific time period. The policyholder pays a premium for a period of time (a term), typically between 10 and 30 years. If the policyholder dies during that time, a cash benefit is paid to your family or anyone else listed as your beneficiary.
Term Life Insurance is affordable, but term policies have no cash value. Your monthly premium stays the same for the entire policy term, and the death benefit is usually paid tax-free to your beneficiaries.
Which Term Life Insurance Policy Is the best?
Before answering this question, let us look at how long you need the policy.
To answer this, here is an example. Jane is a 28-year-old single mom, and her son is 5 years old. Jane can decide to select a long-term coverage of 20 years. This term would see her son through college and the early stages of adulthood. If Jane died 15 years into the policy, her son would be 20. Her son would then use that money to cover her funeral expenses partially and perhaps use the remaining funds to finish his college education.
Just like choosing a model of a brand vehicle, you have the option to choose from a few policies. The ideal policy for you is based on factors like your age, marital status, and financial situation.
There are 3 types of Term Life Insurance Policies
Renewable Term Life Insurance can be renewed after the initial term expires without the need for a medical exam. The term may be as short as one year. Furthermore, for this type of policy, it’s important to note that the premium may increase as you age. Renewable Term Life Insurance might be a great idea for younger people who are interested in the lowest premium available for their age. It is cost-effective and convenient.
If Renewable Term Life Insurance isn’t quite what you’re looking for, you could consider Direct Term Life Insurance. You can purchase this policy online from a Life Insurance Company or Agency. You don’t have to go through an insurance agent here, making Direct Term Life Insurance fast and convenient for many. Your online application is reviewed in real-time to provide you with the best rate as soon as possible.
If you are married and need an insurance policy to cover you as a couple, then you should consider Joint Term Life Insurance. Joint Term Life Insurance provides coverage for spouses under a single policy. Your premiums will be cheaper than if you and your spouse were to purchase separate insurance policies. In addition, it offers a payout on the death of either of the two insured and regular income to the surviving partner. If one of the partners dies, the other partner can claim the life coverage amount.
Now that we have explored the different types of Term Life Insurance let’s tackle the additional questions that are probably on your mind.
Can Term Life Insurance Be Cashed Out?
The simple answer to this question is… no. Term Life Insurance is meant to cover a specific time period. They don’t accumulate cash value during the limited time they provide coverage. However, some term policies can be converted to a form of permanent life insurance.
How Much Does Term Life Insurance Cost?
Age, gender, and overall health play a significant role in premiums. According to US News, an average nonsmoker male will pay $63.75 monthly during a 20-year term. According to Forbes, choosing a 20-year term policy over a 10-year one costs around 40% more ($252 compared to $180 for a 30-year-old female buyer) but doubles your time covered by life insurance. Based on these statistics, it might be wiser to purchase it when you’re younger.
Additionally, rates may increase over a period of time. Statistically speaking, life insurance quotes increase every year.
Suppose you wait too long to purchase life insurance. In that case, you might develop a health condition that might increase your potential policy rates when you eventually decide to buy a life insurance policy.
Do I Need Term Life Insurance?
Ultimately, the choice is yours to decide whether or not you will invest in a Term Life Insurance policy. We recommend it because of the following benefits:
- It will cover you for a set period of time. Ideal for mortgage protection and families with young children;
- It has lower premium costs;
- The benefits are paid tax-free to your insurance beneficiaries when you die;
- Depending on the type of policy you choose, you might not need a medical exam to purchase a policy.
Still have more questions about Term Life Insurance? As a life insurance agent, I’d be happy to help you understand and assess your options. Book a free consultation with me today to get the full breakdown of the best life insurance policies to grow your income while you focus on protecting your family.
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