“Why Term Life Insurance May be Right for You”
Life insurance is incredibly important, because it gives you and your family peace of mind.
While we like to believe it would never happen to us, the reality is that unexpected (and uncontrollable) events can leave you unable to provide for your loved ones. In the event of your unexpected passing, a life insurance policy will provide your family with income to help pay for final expenses, cover the mortgage, or provide future college funds.
But all life insurance policies are not the same, and choosing the right policy for your situation can be difficult.
Term Life Insurance
Term life insurance is active for a specified set of time. If the insured passes away during the term, the beneficiaries receive financial support as determined by the plan. Once the term’s end-date has passed, the plan has expired, and the coverage no longer applies. It is possible to renew the plan when the end-date arrives — but your payments will almost certainly increase. Sometimes term policies can be converted into whole or universal policies, though this depends on the specific nature of your term policy.
Despite this drawback, term life insurance policies have two main advantages: price and flexibility. Because it has an end-date, term life insurance is by far the least expensive insurance policy. Term policies have great flexibility, because term lengths can range anywhere from one year to thirty. If you need a low-cost option that can be adapted to your own unique needs, then a term policy may be the right one for you.
Types of Term Policies
Term life insurance is incredibly flexible and can adjust to meet your unique needs. Some options include:
- Annual Renewable Term — This policy is set to last one year, and it renews at the beginning of the next year. It’s highly flexible and good for those whose situation may change abruptly. This is the lowest-cost option at its beginning. However, it’s not ideal for long-term, stable insurers, because its price increases with each renewal.
- Level Term — This policy is similar to the Annual Renewable Term, except it’s purchased in terms of 10, 20, or 30 years. The initial price is higher than an Annual Renewable’s price, but the cost doesn’t raise until it comes up for renewal — decades down the line. This option is better for long-term insurers.
- Decreasing Term — This policy is similar to the Level Term, except that the benefit decreases each year of the policy’s life, and it is not renewed at the end of the term. Usually, this policy is used to provide your family coverage for a mortgage or other long-term payment.
Whichever option you choose, term life insurance is a great option for those who want to protect their family, but remain flexible for different needs in the future. If you would like to purchase a term life insurance policy, contact us today!