Including life insurance is essential in nearly any good overall financial plan. This is because this type of coverage can help policyholders to protect their loved ones from the high cost of final expenses and other debts, as well as from the loss of income should a family’s breadwinner pass away unexpectedly.
In today’s life insurance marketplace, there are two key types of coverage. Term and whole. Each with its own features and benefits that may work in various financial planning situations.
How Term Life Insurance Works
If you want the standard and simplest plan, go term. Term policies also have a specific duration, such as 5 years, 10 years, or 20 years – after which, the policy will expire.
At that time, the policyholder will either need to renew his or her term life insurance coverage, or simply let the policy end. Due to the set time frame of term life insurance, the policy will only pay a death benefit to the beneficiary during the active period.
One of the key factors which sets term plans apart from whole life is the cash value. With whole life, if you continue to pay premiums, the plan builds value. That value can be used for a loan or invested (depending on the kind of plan).
When the initial “term” of a term life insurance plan ends and the policyholder opts to renew his or her coverage, the new policy will be underwritten at the age and health of the insured. Because of the insured’s older age – and any potential adverse health conditions that the insured may have developed – the premium on the renewed policy may be quite a bit more than that of the policy’s previous cost. And, in some instances, the policy holder may even be deemed as uninsurable.
Types Of Term Life Insurance Coverage
One type – level term – will keep the face amount (death benefit) of the policy the same throughout the entire duration of the policy.
This is different from a decreasing term policy where the payout from the plan decreases. Conversely, an increasing term life insurance plan will have a death benefit that increases over time. This will typically also require an increase in premium as well.
There is also fully underwritten life insurance which requires a medical exam and no exam life insurance which doesn’t require any exams. The insurance company will still ask you all of the health questions and look at your medical records. They are faster, but they are more expensive.
The last option we will explore is guaranteed issue policies. The idea is simple – you apply, you get approved, you have life insurance. Simple. There are no questions asked and no medical exam.
Why Buy Term Life Insurance
There are numerous reasons for purchasing term life insurance. First, this type of policy may allow an insured who is young and healthy to purchase quite a bit more coverage than a permanent life policy with the same premium amount.
Term life insurance policies are also good for covering debt obligations which are temporary. For example, if an individual wants to ensure that his loved ones can pay off a home mortgage should he pass away, he could purchase a 30-year term life insurance policy in the amount of the mortgage balance that is due.
Should the policyholder live for at least 30 more years – and have his mortgage paid off – the need for that particular policy will no longer be present when the term life insurance policy expires.
One of the main reasons applicants buy a term insurance policy instead of the other options, like a standard whole life insurance plan is because of the price. Term plans are much more affordable than the other choices. If you want affordable insurance, term is the way to go.
Where To Get Term Life Insurance Quotes
Term life insurance quotes can be found in a variety of ways. These include online, via telephone, and through a personal meeting with a licensed life insurance agent. When obtaining a quote for a term life policy, certain information will be needed from a potential applicant, such as:
- Age or birth date
- Smoker or non-smoker (or user of tobacco in other forms)
- Amount of policy benefit
- Length of policy duration
In most cases, premiums on term life insurance will be higher for those who are smokers, as well as for those who have health problems. In addition, applicants who are older will also likely pay more in premium than their younger counterparts for the same amount of term life insurance coverage.
Getting Affordable Term Life Insurance
Many websites and insurance agents will also provide a potential term insurance buyer with comparisons of different term life quotes from various insurance companies. This can help individuals in making a better and more informed choice.
Not only can we help you find the cheapest term life insurance, but we can also help you decide how much life insurance that you’ll need to buy. We can help you crunch the numbers and show you plans to protect your family with the perfect amount of insurance.
We want to be both your personal insurance shoppers and your advisors. We’ve spent years gathering knowledge about various companies and plans.
Instead of you having to become an insurance genius, all you have to do is pick up the phone and get in touch with our one of agents.