If you have a spouse, children or both and their current and future standard of living is dependent on the money that you bring home every month, then Term Life insurance is the best financial purchase that you will ever make! For just a few cents per day you can guarantee that if something unforeseen happens to you, they will not have their future will assured.
The Purpose of Term Life Insurance
Nothing can be any simpler than Term Life Insurance. In exchange for a set premium the insurance company promises to pay your beneficiary (the person designated to receive the proceeds) the full amount of your policy.
This type of insurance policy does not build any cash value. You simply decide how long you want the coverage to last and pay the specified premium. The longer the length of coverage the higher the premium.
Here is an example for a $100,000 policy for a 35-year-old male non-smoker:
A ten-year term policy is $7 monthly, A twenty-year term policy is $9 monthly and a thirty-year term policy is $13 monthly
Here is an example for a $100,000 policy for a 50-year-old male non-smoker:
A ten-year term policy is $14 monthly, A twenty-year term policy is $21 monthly and a thirty-year term policy is $36 monthly
How Long Do You Need Life Insurance For?
Most people will need coverage for longer than they may think. Consider these reasons for buying life insurance and the appropriate time frams:
You have young children and you want to guarantee that in the event of your premature death (isn’t all death premature?) their college is paid for. In this case either a 25 or 30-year term policy would be best.
You have a mortgage on your home and it currently requires your income as well as that of your spouse to make ends meet. Since most mortgages are of the thirty-year variety, I would look for a 30-year term policy.
You and your spouse are age 50 and empty nesters but it requires both incomes to maintain your standard of income, including saving for retirement. In this case a twenty or thirty-year term policy is ideal.
Buy the Least Expensive Policy That You Can!
Regardless of the insurance company a $100,000 twenty-year term policy will pay $100,000 in the event of death. Since you do not build any cash values it doesn’t matter what company you choose to buy from. The one caveat is that you only want to buy from an insurance company that is rated “A” or better by A.M. Best. These are the companies with the strongest financials. On my website you can shop the rates of the best life insurance companies in the United States.
Shopping is critical because but rates will vary significantly from one company to the next. Rates for $250,000 Thirty-Year Term policy for a 40-year-old female non-smoker with no physical exam can have monthly premiums as low as $24 with the least expensive insurance company to as high as $36 monthly to the most expensive insurance company. In all cases the death benefit is identical. My suggestion is to buy the least expensive plan!
If You Are Healthy – Change Plans and Save Money!
Rates on term life insurance have been steadily decreasing over the last thirty years. Just because you purchased a twenty-year policy five years ago does not mean that you cannot save money or extend your coverage for the same premium by switching companies. Unlike cash-value life insurance you have nothing to lose by changing plans. But you may have a lot of money to lose by not switching. And in today’s economic world we must make our dollars work harder for us!
48% Of Americans Die Without Leaving Life Insurance Benefits
While the fact that 40% of Americans dies without leaving any life insurance benefits is shocking, another 21% of Americans reported that a loved one died and did not leave enough life insurance. These statistics beg the question: why would an income earning spouse or parent not buy life insurance to protect their dependent’s futures?
One study found that many people put off buying life insurance because they found all very confusing. To those people I have some very good news! Term insurance is simple. You simply choose the number of years that you want coverage, get some rates and then choose the least expensive policy.