Making the purchase of term life insurance is a wise decision if you want to protect your family in the future. While term life insurance is one of the most basic types of coverage available, you still want to put some careful thought into the type of policy you select.
There are different types of coverage available based on face amount and term length and you want to make the best selection possible for your individual situation. Selecting a term length will depend on how long you want coverage for, so let’s review the factors at play in this decision.
Term Life Insurance Lengths
If you’re new to life insurance you may not be aware that term life insurance has a variety of protection options. You can select different amounts of protection whether it’s $50,000 or $10,000,000. There is also a level term which is a fixed rate and protection throughout the life of the policy and increasing/decreasing death benefit options. Personally, just stick to level term is the best type of term and is the one you’ll find most likely being offered.
Now you can also select how long you need the coverage to be locked in for to reflect your situation. The shortest amount of time you can secure a term policy is for one year and it can be renewed each year but at a higher cost. This can be good if you have a very temporary need for life insurance, otherwise, you have an option of selecting a 5 Year, 10 Year, 15 Year, 20 Year and a 30 Year Term policy. Some companies also have a policy that no matter what age you are will be locked in to provide protection until age 65.
So, How Long should you have your policy for? The answer is: As long as you have dependents and as long as there is a need to.
The best thing to do is to ask yourself the questions below and you’ll know the answer.
Do You Have Children?
If you have children or are planning on building a family, you want a longer-term coverage to protect them if something were to happen to you. Twenty or thirty years of protection is a good guideline for these situations. Remember that after your term coverage expires, your insurance can only continue at a skyrocketed premium rate. Purchasing term insurance for the short term will protect you, but you’ll also want to try to convert this policy for the long-term later on.
For now, though, term life insurance will give you a great deal of peace of mind. Not only do you want to provide income protection for the spouse, but you might want to consider whether your husband or wife would be able to afford a college education for those children, too. Determining how much coverage you’ll eventually purchase should include a careful evaluation of all of these factors. Easy online quoting engines can give you an idea of what you’ll pay for a base policy.
Do You Have A Mortgage?
If you were to pass away, would your spouse be able to make the mortgage payments to stay in the family home? You don’t want your family to have to stress out about moving or giving up their family home. The grief from a lost family member is difficult enough. Consider the mortgage not only with the length of the term you select but also with the amount of coverage you end up selecting. One of the best aspects of term life insurance is that it only lasts as long as you need it.
So, if you are concerned about a mortgage that will be paid off over twenty or thirty years when your term insurance expires, it’s likely that you won’t need that same financial protection anymore. That’s why so many people in their 20’s and 30’s find term life insurance the most appropriate for meeting their needs.
Do You Have Debts?
A mortgage sometimes isn’t the only debt you’d like to protect your spouse from. If you have taken on other debts during your life, especially if you are married, term life insurance death benefits can help your spouse or other beneficiaries pay off those debts when you pass away. A term life insurance policy can protect you for the length of the loan payment. For example, you might want to select a ten-year term life insurance policy if you have a handful of debts that will be paid off during that time. You can use term life insurance to bundle together all of your concerns.
How Long Do You Desire Protection?
Term life insurance is, in a sense, like renting life insurance coverage. It’s not going to protect you forever unless you convert it to a whole life or universal life policy while your coverage is still active. Since term life insurance is the cheapest form of coverage, you can really take advantage of a great deal by selecting a 20 or 30-year policy that locks in premiums at your youngest age. You can pay monthly, quarterly, semi-annually, or annually.
Most people select the monthly option finding that it’s the simplest and most convenient. This premium is drawn directly from your bank account every month. Some people have a personal number in mind when it comes to term length. That’s great! Just make sure you have reviewed the steps above to verify that you are selecting the best term length coverage for you and your family.
What if You need coverage outside of the term?
In the event that you need to have life insurance outside the longest term option of 30 years, you may have to look for a different type of policy altogether. And the policy we are referring to here is called a Guaranteed Universal Life a.k.a. Lifetime Term. It provides a fixed rate plan with level protection until age 100 or 121 with very reasonable premiums. It is very popular for people that are over the age 0f 50 or those who don’t want an expiration date on their policy like term life insurance does.
Let Us Help!
You can relax and let a professional help you decide on the type, length and amount of coverage you should go with after doing a complete needs analysis. That’s exactly why we are here for. Not only do we like to educate our consumers but we also like to take care of the entire life insurance shopping for you so you can do things you enjoy. We also work with over 60 top rated life insurers and shop around to get you the best rate. If you have any questions please call us at 888-492-1967 or get a quote online.
