Term life insurance is a kind of life insurance that ensures the payment of a set death benefit if the insured person passes within a certain time period. When the term life insurance policies expire, the policyholder has the option or right of renewing it for another term, converting the policy to permanent coverage, or allowing the policy to lapse.
What Are the Different Kinds of Life Insurance?
Each of these serves a specific purpose, depending on your situation, life stage, and net worth.
- Term life insurance
- Whole life insurance
- Universal life insurance
- Variable life insurance
- Variable universal life insurance
Term life insurance is meant to provide the most insurance coverage for the least amount of money. Term life is usually recommended for young families because of its low cost. It gives you more purchasing power for a higher quantity of coverage than permanent insurance.
Life insurance has a single purpose: to replace your income if you die.
Important Facts About Term Life insurance
- If the insured person dies or passes during the policy term, term life insurance assures payment of a stated death benefit on the policy to the insured's beneficiaries or family.
- These policies offer no value other than the guaranteed death payment and do not include any savings features like full life insurance.
- Premiums for term life insurance are usually determined by a person's age, health, occupation, and life expectancy.
- Term life policy cannot be canceled other than for nonpayment of the premium.
- The type and amount of term life insurance you need will depends on your individual situation, needs, family or business concerns, and income.
Benefits of Term Life Insurance
- It is less expensive. Because it provides financial protection for a certain period of time, term life insurance premiums are less expensive than whole life insurance. Because you will outlast the term and the policy will expire, the life insurance company hopes it will never payout.
- Quick payout. Life insurance proceeds are generally not included in the probate estate unless the estate is listed as the beneficiary of the policy. As a result, the proceeds can be delivered to the beneficiary without delay due to estate administration.
- Flexibility. When it comes to term life insurance products, you have a lot of alternatives. Annual renewable term life insurance can provide coverage for as little as one year. If you need to cover a short-term obligation, such as tuition bills while your child is in college, you can lock in rates for as little as five years. Ten-, fifteen-, twenty-, and thirty-year policies are also available.
- Great for young families and first-time life insurance buyers. Term life insurance is often less expensive than whole life insurance and a better bargain for young families because it does not build cash value and only covers a certain period. Many young families are financially strained, juggling the costs of child care, a mortgage, possibly an auto loan, college and retirement savings, and other obligations.
- Provides financial resources for families. Term life insurance proceeds or payouts can be used to fund college, supplement retirement income, charitable gifting, burial/final expenses, pay off debt, or provide stable income to the remaining family members.
How Much Term Life Insurance Do You Really Need?
A term life insurance coverage worth 10 to 12 times your annual salary is recommended. If you earn $50,000 per year, you should have at least $500,000 in coverage. If something occurs to you, your salary will be compensated for your family. You need enough to cover your family’s outstanding debt and other related expenses.
This isn't easy to contemplate. But the truth is that life is valuable! We can't look into the future, and tomorrow isn't guaranteed. The cost of failing to prepare or think for the unthinkable is far more than the cost of term life insurance. You must ensure the safety of your loved ones.
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Leap | Carpenter | Kemps Insurance Agency Can Help
Protecting your family’s future is a big responsibility, but we can make it easier. When you work with Leap | Carpenter | Kemps Insurance Agency, you can rest assured that just like you’ve got your family’s back, we’ve got yours.
We offer the most extensive range of life and health insurance options in the region.
