Choosing a life insurance policy can be confusing—what are the different types of life insurance options? Which policy is right for me and my family? What can I realistically afford? What are my goals? These are just some of the questions you might be asking yourself if you are shopping for life insurance. In this article, we will explain why term life insurance is the ideal option for most people and situations.
The two main reasons that term life insurance is the right choice are because policies are more affordable, and the terms are straightforward and easy to understand. Permanent life insurance or whole life insurance policies are much more expensive and are much harder to understand.
Let’s explore all of the reasons term life insurance is the preferred option for most shoppers.
What is term life insurance?
There are three main features of a term life insurance policy that differentiate it from other types of life insurance. First, there is a death benefit. A death benefit is a lump sum of money that is paid out by the life insurance company in the event of your death.
Second, with a term life insurance policy, you can choose to designate multiple beneficiaries (i.e. the person or entity that will receive the death benefit). This is particularly advantageous because you can name a backup beneficiary in case the primary beneficiary is not able to accept the death benefit. The beneficiary or beneficiaries you designate can not only be a family member, it can also be a non-profit organization, trust fund etc.
Lastly, a term life insurance policy has a set term, meaning that there is a specific amount of time that the policy is active. Once this term expires, you will no longer have coverage unless you purchase a new policy or renew your existing policy.
Let’s dig a little deeper to expound upon these features to understand why a term life insurance policy is the ideal choice.
Term Life Death Benefits
Term life insurance provides financial protection for your beneficiaries in the form of a death benefit. This lump sum of cash can be used for just about anything, such as burial expenses, college tuition for your children, living expenses for your significant other, mortgage payments or other outstanding debt, a donation to the non-profit organization of your choice and more. The death benefit is usually also tax-free.
Term Life Simple terms
Term life insurance policies feature terms that are easy to understand. While this might not seem like a major advantage, you will come to appreciate it once you compare them to the terms of a permanent life insurance policy. Easier to understand terms means no confusing language that could get in the way of you receiving the maximum benefits from your policy. In contrast, a whole life insurance policy can come in a variety of forms (e.g. whole life, variable life, universal life and variable universal life), making the terms much more complicated to grasp.
Term Life Insurance Cost
Term life insurance is considerably cheaper than any type of permanent life insurance. Any insurance policy gets more expensive as you age, but if you purchase term life insurance when you are young and in good health, your monthly premium can be as low as $30 to $40. Other forms of life insurance, such as whole life insurance, can cost up to 6 to 10 times more than a term life policy for a comparable benefit amount.
Term Life Coverage A La Carte
Term life insurance expires after a designated number of years, when the “term” has ended. While it may not seem so, this is a benefit because it means you have coverage when you have expenses, but do not have to pay for coverage when you no longer have a mortgage or dependents.
Term life insurance is the perfect choice for anyone with people who are financially dependent upon them, and do not have enough money saved up to provide for their financial needs in the event of your premature death. Affordability, simple, straightforward terms and a lump sum of cash are just a few of the many benefits of choosing a term life insurance policy.
Schuler Insurance offers affordable time life insurance policies to Texas residents. Our term life policies feature a fixed duration of 10, 15, 20 or 30 years, with premiums that are generally guaranteed. These term life policies can also be easily converted into permanent life insurance should you need continued coverage after the term ends or have experienced a change in your health status and are unable to qualify for a new term life insurance policy. You also have the option of adding a child rider, which provides coverage should you suffer the loss of a child.