What Is Term Insurance and How Does This Type of Life Insurance Work?
What Is It?
Term life insurance is an insurance product that pays a set death benefit at the time of your unplanned and premature demise during a set policy time period.
How Does It Work?
It’s somewhat flexible in that you can choose the period of time, which is standardly a 10, 20, or 30-year policy time-frame. The monthly and annual rate paid for the coverage generally stays the same, but it accrues no money and the payout is for the designated policy amount.
If you purchase a term policy for $10,000, your beneficiary will receive $10,000 in cash benefit if you pass away during the policy period. No added interest is paid no matter how long you have paid on the policy. The coverage will expire at the end of the allotted time period.
Meeting the Need for Life Insurance
What would happen to your family today if your income suddenly disappeared? Do you have financial obligations that require your ongoing income? Do you worry about a mortgage, or simply paying the basic bills? Term life policies allow you to feel a little less stressed about the unexpected. You can leave your family with the ability to stay afloat.
The one-lump-sum payment of a term policy can be a way to have the life insurance you need at a price that doesn’t crimp the family budget. Many people go without coverage because they think there are no affordable options available. It couldn’t be further from the truth. Term is the best type of policy offering your family a way to avoid financial disaster if the worst were to happen.
What’s the Difference Between Term and Whole Life Insurance?
The differences between a term and whole life insurance policy are obvious when it comes to the financial payout to your beneficiary, but so are the monthly payments. Part of the money you pay on a whole life policy is invested, which means it will accrue interest and can be borrowed against with some policies. A term policy will offer a set payout during the term chosen, but no more. It’s a nice, tidy way to get the exact amount of funds your family needs without the heavy cost.
A few of the benefits of a term life policy are:
- Lower monthly payment
- Guaranteed payout amount
- Flexible time period choices
- Generally fixed payment rates
- Allows you to set the amount of cash your family will need
You can find out how affordable a term policy is by filling out the form today for a no-obligation life insurance quote.
Why Term Is More Affordable Than Whole Life Insurance
Whole life insurance has a high price tag due to the fact that it’s partially an investment tool. The goal with whole life is to invest over the course of your lifetime and leave your beneficiaries with an ever-increasing amount, minus any sums you’ve taken out. A term policy allows you to pay a more reasonable amount over the designated policy period and have a guaranteed benefit if you pass away.
Many people find the term life options more palatable due to the lower payment required and guaranteed amount of benefit. It’s straightforward and uncomplicated to know if you have enough coverage. A good rule of thumb is to figure out what your annual salary is and get an amount of coverage that is 10-times the amount, if possible. The great thing is the flexibility. If you can’t afford that much at the moment, get as much as you are able to financially handle.
Keep Your Family Finances Protected During Critical Times
Most families enter periods of time and situations that leave them vulnerable if the income drastically changes or disappears. It’s during these critical times that getting life insurance is a wise decision. Saving part of your budget for a term policy is essential. The cost of an average funeral can be over $10,000, which can leave any family scrambling when a death is sudden, unexpected, and premature. Final expenses can leave your loved ones struggling financially for years to come. The loss of income can force your family to have to leave their home in search of a more affordable place to live. A term policy can help cover all of these expenses and give them a chance to rebuild their lives.
Don’t leave your family with:
- Unpaid mortgage
- Unpaid car notes
- Unpaid credit card debt
- Unpaid funeral expenses
Critical Coverage Times:
- Starting a family
- Buying a house
- Paying tuition for a college-age child
- Heavy amounts of personal debt
Seeking out a term policy for the amount you need to financially protect your family is a way to get the life insurance you need at an affordable rate. You might be shocked to find out how inexpensive a good policy is and finally get true peace of mind!