Many times, we are asked the question: What is Term Life Insurance?
Term insurance offers excellent and inexpensive protection for a limited number of years. Unless you pass away, you are basically “renting” your insurance with zero chance of cost recovery of premiums paid into the policy. You can think of it as renting your home instead of owning your home when comparing term and whole life insurance. Term insurance can be staggered and layered for different “segments” of your life. Example being the need for insurance protection (for educational needs) until your children finish college (a very specific need for a very specific number of years). So you can “rent” the amount of term life insurance that fits your needs now and then go up or down in the amount of coverage you have in the future as your lifestyle changes along with your financial commitments.
Example: Bob gets married and buys a house. He decides he should probably get life insurance in case he dies so his wife Sally won’t have to worry about paying the mortgage on their house. So he decides to get a $500,000 term life insurance policy which would pay off his house and provide Sally enough money to stabilize her life for a few years while she decides how to move forward. This works out great until 5 years later when Bob and Sally have their first child. Now Bob has to take into account the older conditions of the mortgage and Sally, but also the new child’s well being. Bob decides to increase his coverage to $1.25 million to cover the mortgage, but also the new conditions of childcare and education brought on by the new addition of a child to his family. One of the great benefits of term life insurance is that Bob has the flexibility to make these decisions for his family at a very low monthly cost.
Term life insurance has been around for years and continues to provide individuals and families with needed death benefit at the most affordable rates. Young families needing large death benefits can purchase large amounts of term life insurance at premium rates that will not create havoc in their budget.
With large death benefits and low premiums, it’s a great combination to fill a family need for life insurance.