Term life insurance is a relatively easy to understand product, but there are a few things you need to know before buying your next policy.
Your Age and Health Condition Matter
When you start shopping for term life insurance, your age and health are the most important factors for calculating the price of your policy.
People who are young and in good health can purchase larger death benefits for very affordable premiums.
As people age or begin to have health problems, they’ll find that purchasing life insurance is a bit tougher and much more expensive. For this reason, it’s a good idea to purchase the largest death benefit you can when you’re young and healthy, simply because the premiums are a bargain and a premature loss of life would result in a large loss of income. This is especially important for people who are married and have younger children in the home that need to be taken care of.
The Length of the Term Affects Your Premium
The next largest factor in determining your monthly premium is the is the length of the term. You can choose from a wide variety of terms, including one-year renewable terms.
When deciding if a long-term policy is right for you, it is smart to evaluate the cost versus your needs. For people who have several dependents and are the primary breadwinner in the family, a larger policy makes sense. Term life insurance proceeds can be used for every expense that your family has after the policyholder has passed.
Typically, the higher the death benefit is and the longer the term of the policy is, the higher your premium will be.
Term Life Insurance Is a Key Component in Estate Planning
The proceeds from a term life insurance policy should be enough to pay for final expenses, any debts accrued, and if possible, to set up a reserve of capital to replace income that is now permanently lost.
It’s also worth considering how effective term life insurance is for estate planning. In the event that a large amount of property (such as a paid off home) are included in an estate, it’s a sound move to have sufficient life insurance in place to pay all taxes that would otherwise befall the beneficiaries.
Since death benefits are tax-free, this tactic is a sound approach to passing your estate intact to your heirs without putting undue financial stress on them at a time when they are struggling to deal with the loss of a loved one.
Term life insurance is akin to a Swiss Army Knife when it comes to estate planning.
The tax-free proceeds can be used to fill in the blanks of the estate plan where needed.
Death benefits can be used for any reason, but are usually used to cover medical bills, long-term care bills, debt repayment, as a way to replace income, and final expenses.
The key for a term life buyer is to get quotes from competing companies. Use our instant life insurance quote tool to run quotes.
Once you have collected quotes from a number of insurance providers, you can then decide which policy is best for you based on the coverage, the company’s rating and the price.
A low-cost but highly rated term life insurance policy is a wise financial purchase. By having this policy in place, you have peace of mind knowing you have planned ahead and eased the burden of your family having to solve potentially damaging financial problems after you have passed and you’re no longer in a position to be able to help.
You’ll find that your decision to buy a term life insurance policy is a sound one that helps your beneficiaries at a time when they will need it most.