The Most Affordable Type of Life Insurance
Term life insurance is an affordable insurance plan which can be of great benefit to those who seek temporary death protection, relieving financial hardship for either themselves or their family in the event of death. It is in force for a pre-determined length of time—usually in periods from 10 to 30 years.
This guarantees a large face value in events such as:
- The death of an income earner
- Relieving a business debt
- Assuring college funding for children
- Mortgage assistance
- You are underinsured and want to supplement your coverage
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In the above cases, the need for coverage can be temporary, so the insured is covered for the agreed upon length of time while paying low, fixed premiums. In the event that the insured passes away before the end of their coverage term, the death benefit will be paid to their beneficiary. For instance, if a family has a recent student graduate with unpaid student loans, a term life insurance plan would help ensure that these loan costs are covered in the event that the insured passes away before the term expires. In most cases, this plan does not require a medical examination and is independent from employment or pension plans—it’s all yours.
While the idea of temporary assistance at an affordable rate sounds ideal, it also has its share of limitations. For instance, if the insured party is still alive after their coverage expires and they wish to renew their plan without switching to permanent coverage, they are certainly able to do so; however, they are not guaranteed the same premium or conditions form their previous coverage as term life insurance premiums may increase with age. Those covered under term life insurance cannot borrow against their plan as it does not accumulate cash value; in other words, it serves as insurance only, vs. the insurance plus investment that permanent life policies provide.
When considering temporary life insurance, it is important to consider factors such as:
- Current age
- Current state of health
- Current financial standing (amount of debt, family expenses, etc.)
- Amount of time that coverage is needed
These factors can help determine if a term-life plan is a favorable choice for you and your family.
