What Is Term Life Insurance And Is It Right For Me?
The heads of every family have to think about life insurance at one time or another. It’s a way for people to make sure that their loved ones are going to be looked after should anything happen to them. Whether a father, mother, wife or husband everyone should consider life insurance sooner or later and preferably sooner!
It’s a fact of life that people look into life insurance not because they think something will happen, but just in case something does happen. For those who do, they want to know which one is right for them. Here we’ll take a look at term life insurance, it’s pros and cons, and who it is best suited for.
First, realize that there about a dozen different kinds of life insurance policies to suit everyone’s needs, but let’s take a look at what Term Life Insurance is, specifically:
Term Life Insurance is among the most common forms of life insurance that most people get. That makes it a good fit for almost everyone, but not quite. This is a basic form of life insurance that covers a person in the event of their death and expires after a certain period of time, hence the name.
This policy is usually offered in terms that start out at five years and increases by that same number for up to thirty years or more. There are even one year policies that a person can take out, if they want to. Its terms are also the easiest to comprehend.
In comparison, there is what’s called Whole Life Insurance which is the next most common kind of insurance policy that people get. It’s also more expensive, but it also offers more benefits than term life insurance.
First of all, term life insurance expires after a set date and it only covers people in the event of their deaths. Whole Life Insurance covers people for the rest of their lives, as in, it covers them for their “whole life”, to put it another way. This seems like a great idea, at first, but it’s also what makes this form of insurance more expensive than term life insurance.
Also, term life insurance is there solely to provide the survivors of a person with a policy should that person pass away. Term life insurance does not cover a person if they get sick, end up with a disability, or if they end up needing money.
Whole life insurance has a premium that remains the same for the entire term, which is the rest of the person’s life, but it also costs quite a bit more. One of the biggest differences between the two insurance programs is the term life insurance is something that payments are made on, but the money put into it never builds up. In other words, once the term is finished, there isn’t any kind of payment.
Why should there be? Well, there shouldn’t since this more affordable form of insurance is there specifically to cover a person in case of their death. Whole life insurance, however, builds value because it lasts for a person’s entire life. That does give it the advantage for people to cash some or all of the money accrued should they have the need.
So, the pros to term life insurance are that it’s affordable, easy to understand, and will cover a person in the event of their deaths. This is the simplest, most straightforward, what you see is what you get, kind of life insurance.
The cons to term life insurance are that it doesn’t accrue any value, it does expire, and it doesn’t take care of any other life events that might severely impact your ability to work and care for your family.
In the end, the people who are more likely to be suited for term life insurance are people who have budgetary concerns and whose attitude is that the more that they can save on life insurance, the better.
This form of insurance is also targeted at those people who aren’t looking at life insurance as an investment or a disability fund. Term life insurance is for people who are looking for a policy that will make sure that their loved ones are taken care of should they pass away and nothing else.
Term life insurance is also meant for those people who don’t have the time or energy to spend thinking about their life insurance. It’s a kind of get it and forget it policy that doesn’t require a lot of fuss.
It’s also the choice for people who aren’t ready to commit to a long-term policy that might tie them down or for those who just want a temporary measure to cover them for just a year or so.
By John Kan