Guide to Term Life Insurance

Carrying a life insurance policy to protect your family in the event you pass away unexpectedly is something most heads-of-household do. It provides the peace of mind that is necessary in order for you to go about making a living and enjoying your home life. Simply knowing that your family will be provided for when you die makes living easier. The problem you have is to choose which type of life insurance to buy–term or whole life. That’s a decision you’ll have to make based on your knowledge of the differences between the two. Following is a guide to term life insurance.

What Is Term Life Insurance?

A term life insurance policy is an agreement between an insurance provider and an individual that stipulates the carrier will release an agreed upon amount of money to a beneficiary you name ahead of time when you pass away. Unlike a whole life policy, which remains in effect from the time you sign the papers until you either pass away or redeem the policy for cash, a term life insurance policy only covers you for a specified period of time. When that time expires, you must either renew the policy or buy a whole life policy.

Benefits of a Term Life Insurance Policy

One significant benefit of a term life insurance policy is that it usually costs a lot less than a whole life policy. It’s cheaper because the length of the policy is predetermined–it has an expiration date. Insurance carriers are able to provide a term policy for less money because the individuals who generally opt for a term policy are younger, which means they’re less likely to contract a serious illness. It makes sense for younger people to buy a term policy because they’re usually just starting out in a career and beginning to raise a family, which means their financial situation isn’t as well defined as it will be when they’re older–they may not be able to afford the premiums of a whole life insurance policy. When their term life insurance policy expires they may be more financially secure and will have more options–renew for another term, or buy a whole life policy.

Downside to Renewing a Term Life Insurance Policy

The downside to renewing a term life insurance policy is that you will more than likely be required to undergo a complete physical exam. If you’ve developed a serious illness in the interim, you may be denied coverage. At any rate, your premiums will undoubtedly go up due to the simple fact that you’re older–life insurance rates always increase as you age.

Planning for the Future

If you’ve decide to go with a term life insurance policy, you need to determine how much coverage you’ll need and decide upon the length of the term. Keep in mind that you’re planning your family’s future without you, so you’ll have to make sure they’ll receive enough money to pay off a mortgage, take care of monthly bills, and buy food, clothing, and other necessary expenses for quite a while. You will also have to figure in the amount of money it would take to provide auto, home, and health insurance for your family for an extended period of time.

Term Length

The next step in the process would be to decide how long a period of time your term life insurance policy should cover. If you have young children, you should consider making the policy run through their college years, just to be sure their higher education costs can be met. Term policies come with a variety of options, so you will be able to choose a term in excess of 25 years, if that seems appropriate.

Research

Once you’ve decided how much coverage to get and determined the length of your term policy, you will need to find the right insurance carrier–one that can offer you the policy you want at a price you can afford. Go online and gather some quotes from insurance companies that do business over the Internet. Make notes of the different policies that are available and their prices. After that, you should begin contacting some brick and mortar insurance companies and get quotes from them as well. Compare the prices and options that are available from everyone you’ve contacted, and make a decision–an informed decision.

Guest post from Payton Price. Payton writes about term life insurance quotes for TermLifeInsurance.org.

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