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If you have a spouse, children or both and their present and future standard of living is dependent on the money you bring home every month, term life insurance is one of the best financial purchases you can make! For only a few cents a day you can guarantee that if something unexpected happens to you, their future is not assured.
Purpose of term life insurance
Nothing can be simpler than term life insurance. In return for a specified premium, the insurance company promises to pay the full amount of your policy to your beneficiary (the person designated to receive the income).
This type of insurance policy does not create any cash value. You just decide for how long you want the coverage and pay the specified premium. The longer the coverage period, the higher the premium.
Here is an example of a $100,000 policy for a 35-year-old male non-smoker:
The ten year term policy is $7 monthly, the twenty year term policy is $9 monthly and the thirty year term policy is $13 monthly
Here is an example of a $100,000 policy for a 50-year-old male non-smoker:
Ten year term policy is $14 monthly, twenty year term policy is $21 monthly and thirty year term policy is $36 monthly
For how long do you need life insurance?
Most people will need coverage for longer than they think. Consider these reasons and appropriate time frames for buying life insurance:
You have young children and you want to guarantee that in the event of your premature death (aren’t all premature deaths?) their college is paid for. In this case a term policy of either 25 or 30 years would be best.
You have a mortgage on your home and currently need your income as well as your spouse’s to meet it. Since most mortgages are of the thirty-year variety, I would look for a policy with a 30-year term.
You and your spouse are 50 years old and have empty nests but both need income to maintain your standard of living, including saving for retirement. A term policy of twenty or thirty years is ideal in this case.
Buy the cheapest policy you can afford!
The $100,000 twenty-year policy will pay $100,000 in the event of death, regardless of the insurance company. Since you don’t create any cash value, it doesn’t matter which company you choose to buy from. One caveat is that you only want to buy from an insurance company that is rated “A” or better by A.M. Best. These are the companies with the strongest financials. On my website you can buy rates from the best life insurance companies in the United States.
Shopping around is important because rates will vary greatly from company to company. Rates for a $250,000 thirty-year policy The monthly premium for a 40-year-old female non-smoker can be as low as $24 with the least expensive insurance company, to as high as $36 monthly for the most expensive. Death benefit is same in all the cases. I recommend buying the least expensive plan!
If You’re Healthy – Switch Plans & Save Money!
Rates on term life insurance have been steadily decreasing over the past thirty years. Just because you bought a twenty-year policy five years ago, doesn’t mean you can’t save money or increase your coverage for the same premiums by switching companies. Unlike cash-value life insurance, you have nothing to lose by switching plans. But you could have a lot of money to lose by not making the switch. And in today’s economic world we must make our dollars work hard for us!
48% of Americans die without leaving life insurance benefits
While the fact that 40% of Americans die without any life insurance benefits is shocking, another 21% of Americans reported that a loved one died and didn’t leave enough life insurance. These statistics beg the question: why wouldn’t an earning spouse or parent buy life insurance to protect their dependents’ futures?
One study found that many people put off buying life insurance because they find it all too confusing. I have some great news for those people! Term insurance is simple. You just choose the number of years you want coverage, get some rates, and then choose the least expensive policy.
Another reason why many people don’t buy life insurance is because they don’t want to deal with an insurance agent. These individuals view insurance agents as little more than salespeople and nobody wants to sell. There is good news on this front as well. Advances in technology have resulted in websites like mine where you can get a quote and enroll without ever having to speak with an insurance agent, unless of course you want to!
Term life insurance has never been cheaper
A 35-year-old non-smoker can get $100,000 of life insurance for twenty years at a rate of $9 a month. This same person can provide the same $250,000 twenty-year life insurance for only $4 more per month to his family.
So don’t put off protecting your family’s financial future.
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