Often times, people take it into their own hands to plan out their finances for the future ahead. One of the best ways to do this is to have term life insurance so you can always be one step ahead of things in the event of an unexpected death. To get a better understanding of what term life insurance is and how it will benefit you and your family continue to read.
Term Life Insurance: What is It?
Term life insurance provides protection for a specific period of time and guarantees payment in the event of the death of the person who’s insured. This policy provides a cash benefit to be used by the beneficiaries for funeral expenses, medical bills, or debt. Set up prior to a person’s death, so when they do pass away everything is already taken care of financial-wise, and no one has to figure it out during the difficult time after losing a loved one.
How Long Will Term Life Insurance Last?
This policy can last anywhere between 1 to 30 years and taking it out when you’re young and healthy is the best cost option. Every policy length differs depending on the person’s age, health, and life expectancy. The length will be decided by the insurance provider based on the above factors. If the insured is still living once it runs out, they will not receive any payout from the insurer, and they will have to renew the insurance, make it a permanent coverage policy, or get rid of it completely.
Benefits of This Coverage
Term life insurance offers so many benefits that it’s almost impossible to turn down. Below is a list of advantages that come with this policy:
- Pay the lowest premium and receive the greatest death benefit
- Provides the best alternative to temporary life insurance
- Different options to choose from to meet the needs of different people
- Immediate payout to beneficiaries because it’s not part of the probate estate
- Benefits aren’t subject to federal income taxes
Types of Coverages
There are three different types of term life insurance policies, which all have different lengths and premium rates.
- Level Term: A policy ranging from 10 to 30 years. The premium rate and death benefit are fixed; however, the premium is higher than other options due to the increasing costs of insurance over the length of the policy.
- Yearly Renewable Term (YRT): This policy has no specific term but can be renewed every year. As the insured person ages, the premium also increases and can become quite expensive. If you’re considering this option, be sure to weigh the costs for each year as well as your overall health.
- Decreasing Term Policies: This kind of coverage often goes hand and hand with a mortgage since it matches coverage for the declining principal of the loan for the house with this type of policy, the death benefit declines every year, and a fixed premium is paid throughout the policy’s life.
Why Is Term Life Insurance Needed?
This policy is needed to provide financial help to your immediate family by paying for everything in your name once you pass. Term life insurance is helpful for people who have a mortgage, kids, or other expenses. New families with children have the opportunity to buy coverage for lower costs and any income lost by death will be replaced. Likewise, this type of coverage is also helpful for people who need a certain amount of temporary insurance.
Term life insurance is an affordable option to assure your family and friends receive proper death benefits if you happen to pass. For more information about which life insurance policy is right for you, contact the experts at TJ Woods Insurance Agency. Reach out to us now for a free quote.
