When taking out life insurance, one of the most common challenges buyers face is choosing the right policy. There are numerous kinds of policies available, including what is known as term life insurance. This type of policy is becoming increasingly popular, so it’s important to understand what it covers. Just what is term life insurance, and how does it differ from other life insurance policies? Here’s a brief overview of this popular policy type.
Term Life Insurance
This type of policy comes with a limited insurance window. Essentially, if you pass away during the timeframe set out in the policy (the term), then your dependents would be provided with a payout. This payout is only guaranteed if you pass within the term specified by your policy.
Some providers refer to these policies as “pure life insurance,” but they’re one and the same in terms of functionality. They differ from standard whole-life policies in that they offer zero saving or investment opportunities. Instead, they simply guarantee a specific payout within a certain timeframe.
The premiums attached to term life insurance policies depend on several factors. The policy provider will consider your age, health, lifestyle, and the average life expectancy of those in similar situations. Your individual level of coverage will typically start at around $100,000, and it can rise to as much as $1,000,000 or more.
How Long Does Term Life Insurance Last?
The rate and timeframe that you can choose will differ depending on the policy provider and your personal situation. However, the most common timeframes are anywhere from 10 to 30 years. Your current age, amount of personal debt, and number of dependents will ultimately influence your policy decision.
What Happens if My Term Expires?
Some people worry about their term life insurance expiring. The common concern is that they will no longer be protected if their policy runs out. While this concern is valid, it’s not the only choice. You may also choose to:
- Renew the insurance policy on similar terms as before,
- Convert the policy into a more permanent option on different terms, or
- Allow the life insurance policy to lapse in order to change providers.
Regardless of your choice, having insurance is essential for your family’s long-term security. We highly recommend finding a new policy at once if you let your current term expire. Circumstances can change at a moment’s notice, and having a policy you trust will provide greater peace of mind in the event of any unexpected incident.
Why Choose Term Life Insurance?
The simplest reason is the price. These policies are typically the least expensive of all life insurance options. This is because they only supply a limited death benefit, and they feature no savings or critical illness benefits.
Their limited nature means that premiums will be a fraction of what they might be for whole-life coverage. Most term policies expire before paying a death benefit, so insurers generally see them as safer bets, and they price them accordingly. In general, these policies are great options for anyone interested in affordable, short-term coverage.
Young parents and growing families often benefit from term life insurance. Its guaranteed death benefit is often adequate to support children until they reach adulthood, and its low premiums make it more accessible than many other options. While they lack the benefits and the longevity of other policies, term life insurance can certainly provide protection when you need it most.
We’re Here to Help
We make choosing the best insurance policies simple. Our experienced agents are eager to sit down and discuss your unique needs together. If you’re interested in learning more about your life insurance options, then please feel free to contact us to find an agent today.