Term Life Insurance Understood

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Term Life Insurance Understood

By: Roger Kelley

Life insurance provides a death benefit to your beneficiaries and can replace some of the income you were earning. Therefore, an important part of a sound financial plan is aqequate life insurance. Adequate meaning that it will provide enough money that your family can continue living the same standard of life that you've worked so hard to provide for them while you're alive. For example, this can help preserve any investments, savings, or other assets you intended on paying off.

Term Life Insurance:

Term life insurance is a policy that provides coverage to the insured over a certain length of time. This makes this policy an assset to your overall financial portfolio. One key advantage of level term life insurance is that the monthly premiums remain level for the life of the policy (whether it be 5, 10, 15, 20, 25, or 30 years).

The benefits in the different types of life insurance should not be overlooked. Before you buy a life insurance policy you should evaluate the overall condition of your financial portfolio. Yearly renewable term life insurance has a lower initial premium. However, the premium rises each year. Yearly renewable term life insurance is only cost effective for a few years because of the increasing premiums. If you are looking for term life insurance that runs more than a few years then a level term life insurance policy can cost less.

Serveral Good Reasons For Investing In Term Life Insurance:

Term life insurance cost less than permanent insurance. A potential buyer may have young children at home and he/she has to protect his/her income. They may have bought a house and now have a 30 year mortgage for $500,000. Hence, they would need to purchase a level term life insurance policy for $500,000 30 year term to cover their mortgage. If something were to happen to the proposed insured between now and the next 30 years the insurance company would write a check for the full face amount of the term life insurance- policy for the survivor to pay off the mortgage and the balance would be paid to the designated beneficiary.

Term Life Insurance Conversion Option:

One nice thing about term life insurance is you can consider conversion options, such as a convertible option. A convertible term life insurance policy means that during a specified time you can convert all or part of the term insurance to a permanent life insurance product. If you chose3 this option you wouldn't have to prove evidence of insurability since you were already insured. For instance, if you take out a term life insurance policy your need for the amount of coverage may change down the road. You may still need some life insurance but can afford to lower the face amount of the policy, thereby lowering your premiums when you excercise a coversion option. The conversion option on a term life insurance policy simply gives you the option to convert over a certain amount to cover final expenses.

Term life insurance is very attractive to young families simply because it can be bought at an extremely low price. While you're young and enjoying a high expectation of good health you can lock in a term rate ... being young and healthy has its benefits and the cost of term life insurance is guaranteed for the full length of time on a guaranteed level term.

However, some clients like to combine different types of insurance plicy for even greater benefits. You can use term life insurance with a permanent life insurance policy so that during the earlier years of the policy you will have more coverage. As you get older you may not need as much insurance as you originally applied for. For example, the children are grown and/or the house is paid off so the need for so much coverage is not there. At that point you could allow the term insurance policy to expire and still have the permanent insurance that was put in force at the same time the term insurance was issued. If you take advantage of this opportunity you will still have the permanent life insurance to pay off final expense benefits down the road.

Reasons Why You Might Need Life Insurance:

1. You can protect your family’s home and eliminate your mortgage.

2. Maintain your family’s standard of living.

3. Give your spouse retirement income and peace of mind.

4. Pay off outstanding debts you have incurred.

5. Use insurance payments in the family business.

Term Life Insurance Policies:

1. Term policies are designed to meet a multitude of personal and business needs and offer the most coverage for your investment.

2. Term insurance provides protection for a certain period of time (10,15,20,25,30 years) and pays the death benefit to your beneficiary if anything were to happen to you during this time.

3. Term life insurance policies do not accumulate cash value but many allow you to convert your policy to a permanent policy within a specific time period.

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About The Author
Term Life Insurance article submitted by Roger Kelley. Reliable coverage. Receive a FREE no-obligation quote at at Term Life Insurance
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