Choosing Insurance You Will Love

Term Life Insurance: What To Know

With all the types of life insurance around, it is hard to make a decision about what kind is actually the best for you and your family.  Everyone seems to have an opinion on the subject, but every family is different.  What works for one family may not work for the next. 

One thing that most people do agree on is that if you provide for your family, you need to have some type of life insurance.  Life insurance protects your family in the event of your death.  It is recommended that your life insurance policy is 10–12 times your annual salary.  For example, if you make $50,000 a year, you would want at least a $500,000 life insurance policy.

What is term life insurance?

Term life insurance is a cheap, "temporary" form of life insurance.  You purchase the coverage for a certain term, such as a 5 year, 10 year, or 20 year term.  Each month in that term, you pay a premium.  Premiums for term life insurance range in price, but are fairly low.  There is no cash value in a term life insurance plan, so at no time can you "cash out" your plan and get money.  It is not an investment.  The benefits are paid only upon death. 

After your term expires, you will need to purchase a new term.  By that time your premium will be higher.

What is the purpose of term life insurance?

Term life insurance is not meant to be an investment.  It is meant to protect your family in the event of the loss of income due to death.  This is why it is so cheap.  Many people choose to use it during the time of life when their family is growing and there are more people to provide for.  Some people buy it with the first term set to expire around the time their children are in college.  At that time the term expires and they could renew it or choose a different life insurance option.  Once your children are out of the house and on their own, you may wish to change your term and coverage amount. 

What are some tips to make term life insurance work for me?

Since term life insurance is so inexpensive, you can use money left each month to invest in other ways.  Some life insurance policies will try to get you to invest in "riders," such as additional coverage for critical illness or accidental death.  These are often unnecessary.  It is also a good idea to review your life insurance policy periodically to make sure it still fits your family's needs.  Contact an insurance agency like Advantage Insurance Agency, Inc for more information.