Term Life Insurance-How Does It Work?
Term Life Insurance is typically the lowest cost and one of the most basic type of life insurance.
It lacks the bells and whistles of other types of policies Like ROP and Permanent Life Insurance.
Term Life Insurance Only Provides a Death Benefit! Lets dive in and see what you actually get.....
Its called term insurance because the death benefit is guaranteed for the a period of time known as the term. Typically you can purchase coverage for 10,15,20, 25 or 30 years but it can vary by company. Some polices may even last to a specified age.
Why Would Someone Want Specific Term? Term Insurance is a good resource to protect your income. So if you 35 year old and want to retire at age 65, you would want to purchase a 30 year term policy. It helps protect your income until you are able to take out your retirement or start drawing social security benefits.
What are the Benefits of Purchasing Term Life Insurance?
Purchasing Term Life Insurance can be really simple but do you really know what you are getting? Term insurance is one of the most basic types of life insurance. You want to make sure to understand the pro's and con's before making a decision on which type of life insurance you want to purchase.
Pros
Leveled guaranteed premiums for a set period of time such as 10,20,30 or even 35 years.
Term life Insurance usually provides the lowest cost.
Sometimes provides an excel-rated death benefit.
Pays a lump sum tax benefit if the insured dies.
Cons
No Benefit if you outlive the Term
No Cash Value
Don't get anything if you cancel.
When Should I Purchase Term Life Insurance?
Purchase Term Insurance is a big decision. You have the ability to protect your family. Purchasing it now versus later will save you hundreds if not thousands of dollars. Here are some major events when you will want to consider purchasing term life insurance or increasing your term coverage.
- Getting Married
- Buying a Home or Car
- Having Children
- Start your Own Business
- Losing Other types of Life Coverage
- Changing Jobs
- Other Major Life Events
How Much Life Insurane Do I Need?
One of the common questions we get is: "How much life insurance do I need." This is loaded question because it depends on so many different factors. You don't want to be insurance rich and cash poor but you also want to have enough to make sure family is able to live comfortably.
- Know how much you can afford. You don't want to get part of the way through your policy and have to drop it. It will likely cost more to purchase a new policy.
- Gather how much debt you have and what it would take to pay it off. The last thing you want to do is leave your loved ones with too much dept.
- Look at yours families goals. This could include when you spouse wants to retire, would you want to pay for your kids college or even would you want to pay for your son or daughters wedding. In the event that you pass, you can still have life insurance set aside to help meet these goals.
- Look at the cost of your funeral. You might something simple or a large service.
How Much Life Insurance Should My Spouse Purchase?
The main income in the family needs to be protected. If your spouse today, how long could you truly make it on one income. You need to get at least 10 times the income of your spouse. This would give your significant other the ability to make it 10 years in a similar fashion to the way they live now. An even better option is to get 20-30 times your annual income.
If your spouse is not working, we recommend getting at least half of the coverage as yourself. Many people don’t realize although their spouse may not be working, they still provide value to the family. What if you lose your job and you have to find a lower paying one? This is why you always carry some kind of insurance on a non-working spouse.
Term Life vs. Whole Life
Term Life Insurance is better….
No Whole Life Insurance is better!
This is the ongoing debate in the life insurance world. The main difference between the two is that whole life provides a cash value and doesn’t go away as long as you continue to pay premiums. Term insurance only provides coverage for a specified period of time.
Term Insurance
No Cash Value
Specified Term
Lower Cost
Whole Life
Builds Cash Value
No Specified Term
Higher Cost
Answer: Term vs. Whole Life
The simple answer is that neither term or whole life insurance is a best fit for everyone. Term insurance is best for some people while whole life may a best fit for others. Lets take a look at which policy is a better fit for you.
Term Insurance: Term insurance is a best fit for someone whole is able to invest their money and save appropriately. Term is designed to protect your family or an important asset. Someone who saves over time will no longer need to have life insurance at a later age because they have the assets in place.
Whole Life: Is designed for someone who doesn't want to have to save. As you get older, you will keep your coverage as long as you continue to pay the premiums. You may be able to borrow or take a loan out against your life insurance if you ever need money fast.
How Do I Buy Life Insurance?
Purchasing Life Insurance is a big decision. You can purchase Life Insurance a Variety of different ways. In the past, your options were limited but today the process is fast and simple.
Online: In the past, purchasing life insurance was the only way to purchase. Today, the internet has made that a thing of the past.You can start the purchasing problem online within 60 seconds. You can even do so from the instant life insurance quoter on this page. Simply put the length of term and amount of insurance you would want to purchase to get a rate.
In Person: You still have the ability to find a local agent. If you are located near Springfield, Missouri, we work with about 25 different life insurance companies.
Phone: You can also get the process started over the phone by calling 417-773-7822. You will likely have to sign some documents that can be either down by e-signatures or through the mail.