For many, life insurance can feel like just another expense - until you really need it. But even if you have a budget that doesn't budge, term life insurance can be a cost-effective solution to get the insurance coverage you need at an affordable price.
Term life insurance quotes - A good place to start
Begin by asking yourself whether your family would have enough to live on, pay off debts (including a mortgage and funeral expenses), and pay for costs to raise and educate your children if you were gone. Remember that when you die, your paycheck stops, leaving a significant difference between your expenses and assets. Fortunately, this is where term life insurance can help fill the gap.
Try using an online life insurance calculator to get an estimate of the amount of term insurance you might need, or consult with a qualified life insurance agent for help. Considering buying the longest term you can afford to ensure that you have coverage for as long as you might need it. Also, consider adding policy riders that will allow you to access the policy death benefit in the event of a terminal illness or even convert a portion of your term policy into a permanent policy (such as whole life or universal life).*
What is the difference between term and permanent life insurance
Both term and permanent policies allow you to select an amount of coverage in exchange for your premium payments over the life of the policy, providing a lump sum payment to your beneficiaries when you die. Permanent policies earn cash value and remain in force as long as required premiums are paid on time. Coverage with a term policy lasts only for a specific time period (often offered at 10-, 20-, or 30-year terms), with no cash value accruing. Once the term is over, the policy coverage (and required premiums) will end.
Term Life can be a very affordable interim solution
People often delay purchasing life insurance because they think it is more than their budget can handle, and they often overestimate how much it will cost. However, term life can be an affordable way to get the coverage you need - today.
Things to consider
- Permanent life premiums are typically higher than term life premiums, making term a more affordable option to get a policy in place. But remember, term life comes with an expiration date!
- Due to the cost, people who find a permanent policy more appealing might buy less coverage than they need, leaving them under-insured. Consider a combination of a permanent and term life policy to get the coverage you need, or a term policy rider that allows you to convert a portion of your term policy into a permanent policy at a later date.*
Getting the coverage you need … today
As you age, it gets more expensive to buy life insurance. Moreover, certain health conditions can make premiums increase - or worse, make it difficult to qualify for life insurance coverage at all. For the same price of a weekly specialty coffee drink, you'd be surprised at how much term coverage you could afford.
For more information on types of life insurance, visit our learning center.
*Not all term policies or life insurance companies offer terminal illness or conversion riders.
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