Key Points
• Term life insurance is for a set period of time (the “term”) and pays a lump sum to your loved ones if you die during the term.
• The term period will usually last from 10-30 years.
• Some term policies include riders including: Return of Premium (get all your money back if you outlive the term) and Living Benefits (access the value of the death benefit while you are alive if certain criteria are met).
• Term is generally meant to cover short term debts or to cover many years of lost income.
Life insurance offers a shield of financial protection for your family if you die and are no longer able to provider for them. When shopping for a policy and looking for the most bang for your buck, that’s where term fits in.
Unlike permanent or whole life insurance, which last the rest of your life and includes cash value, term is an easy to manage and cost effective way to shield your family. Because of it’s general low cost and simplicity many people like it, especially those who need temporary coverage.
Things to consider...
There are many factors that go into deciding how much coverage you need to shield your family in case of your early passing. These things will change over time which is why it is vital to keep up with your plan and if needed make adjustments over time.
These factors include:
• Final costs (casket/urn, plot, headstone or marker, service etc)
• Replacement income (most people plan to replace at least 7 years of lost income)
• Pay off debts (student loans, car, credit cards and your home)
• Education (do you have children that you want to make sure their education is paid for?)
Coverage Options
The amount of coverage is very flexible and can go very high, up to $5 millions dollars and beyond. While term life is the most cost effective coverage, the higher your coverage the higher your premium will be.
A few things that are taken into consideration that will affect the pricing of a plan are:
• Health – People with health problems or a family history can be charged more
• Age – Each year you wait to get coverage the more it will cost you
• High Risk activities – Dangerous jobs and hobbies make you a higher risk, so you’ll pay more
• Amount of coverage – The higher in coverage, death benefit, you go the more it will cost.
• Length of term – The longer the policy lasts the more it will cost
• Riders – Adding certain riders may increase the monthly cost. Though some riders are included at no additional charge (based on the company)
What's Next?
While you can certainly shop on your own and pick out a good plan. We tend to find that by talking with an insurance advisor there are often items that are overlooked when it comes to finding the right plan. If you’d like to shop on your own you can click on the Insurance “buttton” here. Or if you would prefer a one on one no cost consultation please fill out the form below and we will be in touch.
