Introduction
Are you debating the value of life insurance? The short answer is yes. Term life insurance is a cost-effective solution to assist in financially securing your family.
The answer is straightforward if you’re wondering whether life insurance is worthwhile. Absolutely; especially if you have family members that depend on you financially.
If you were to suddenly pass away, life insurance serves as a crucial financial safety net. Particularly term life insurance offers protection at a reasonable cost during the years when your dependents’ finances are most in need of it.
Find out more about term life insurance, including how it functions and why it might be a crucial component of your financial strategy.
Topics we covered
What exactly is term life insurance and how does it work?
Who needs term life insurance?
What does term life insurance cost?
What are the alternatives to term life insurance?
Term versus permanent life insurance: Which is right for you?
When might term life insurance not be worth it?
Thinking about life insurance? Why you may want to act now
What is term life insurance exactly, and how does it work?
If you want to provide financial protection for your family at a reasonable cost, term life insurance is worthwhile. It’s a straightforward, reasonably priced sort of life insurance that provides coverage for your family for a predetermined amount of time, generally 10, 15, 20, 25 or 30 years. You select a term length that corresponds to the duration of your financial obligations. For instance, until your mortgage is paid off or the kids are adults.
Which term length you require can be determined quite simply. To assist you choose the term coverage amount and duration that may be the most suitable for your financial position, you can utilize an online life insurance calculator.
A life insurance policy offers your family financial security in return for monthly or yearly premium payments made for the duration of the term length. A payment known as a death benefit would be made to your beneficiary or beneficiaries if you passed away during the term duration. The death benefit’s proceeds can be used to cover both ongoing expenses like the mortgage and child care as well as those that occur with death, such burial costs and other farewell costs.
What occurs after the phrase length may be something you’re interested in knowing. So, the story is ended. You do not receive your premium payments back (similar to car insurance). But that’s the objective, to have coverage in place at a reasonable price for those critical.
Who is eligible for term life insurance?
Purchasing life insurance is unquestionably worthwhile if you have loved ones who are financially dependent on you, such as spouses, children, siblings, or parents. Life insurance can be an excellent way to ease the financial burden of death on a family, even if you are not yet financially dependent on anybody (at least financially.) The payout from a policy can assist with meeting financial commitments like funeral costs or, if you have any ongoing debts, with paying them off. Your financial legacy may be involved.
Use an online life insurance calculator to determine whether you require term life insurance. Your age, income, and family structure will be taken into account. You can determine whether you don’t need any coverage at all with a life insurance calculator.
In short, term life insurance is a worthwhile (and affordable) way to help financially protect your loved ones. A policy’s death benefit could help:
- Replace lost income and pay living expenses, like rent or a mortgage
- Pay debts you leave behind
- Provide for your kids’ care if you are a stay-at-home parent
- Pay for burial, estate taxes and other final expenses
- Fund college costs
- Pay unpaid medical bills or taxes
- Create an inheritance
You can ensure your family’s financial security even after your passing for a relatively small sum of money. If you need any additional motivation to purchase a life insurance policy, keep in mind that the death payment your chosen beneficiaries will receive is normally tax-free.
A valuable (and reasonable) option to assist in providing financial security for your loved ones is through term life insurance.
What does term life insurance cost?
Your age, gender, and health, as well as the term length and coverage amount you select, will all affect how much a term life insurance policy will cost. The following are illustrative quotes for a 20-year Haven Term life insurance policy for healthy individuals from MassMutual or C.M. Life.
| AGE | COVERAGE | ||||
|---|---|---|---|---|---|
| $250,000 | $500,000 | $750,000 | $1,000,000 | ||
| 25 | Male | $12.09 | $18.73 | $24.97 | $30.54 |
| Female | $10.82 | $14.86 | $19.16 | $23.03 | |
| 30 | Male | $12.48 | $19.04 | $25.44 | $30.82 |
| Female | $10.87 | $15.16 | $19.60 | $24.55 | |
| 35 | Male | $13.11 | $20.72 | $27.95 | $34.08 |
| Female | $11.86 | $17.50 | $23.13 | $29.03 | |
| 40 | Male | $17.33 | $28.42 | $39.50 | $49.15 |
| Female | $14.99 | $24.11 | $33.03 | $40.82 | |
| 45 | Male | $26.03 | $42.49 | $60.61 | $80.00 |
| Female | $21.03 | $36.45 | $51.55 | $66.57 |
What are some term life insurance alternatives?
Permanent life insurance is an option to term insurance, and whole life insurance is a typical form of permanent protection. The main distinction between term and permanent life insurance is as follows: A permanent life insurance policy covers you for the rest of your life, while term insurance only covers you for the “term” amount of time.
With term life insurance, you choose a term that corresponds to the length of time you anticipate needing the coverage for—for example, until the mortgage is paid off, until the kids graduate from college, or until you retire. The death benefit is paid to your beneficiaries to help with debts if you pass away before the coverage period expires.
You pay for lifetime protection when you get a whole life insurance policy. The insurance policy also has a cash value component that builds up over time. A strategy to assist with things like retirement or your children’s college expenses is to take out loans from the cash value that has accumulated in your life insurance policy. It’s crucial to understand that accessing the cash value of your policy—whether through borrowing or partial surrenders—decreases both the cash value and the death benefit. Additionally, it raises the possibility that the policy would lapse, which could result in a tax burden if the insurance expires before to your passing. Furthermore, some whole life insurance contracts (those that are “participating”) may be eligible for dividend payments. Dividends, however, are not assured.
The cost of the two types of life insurance is another significant distinction. Whole life insurance is substantially more expensive than term insurance; in fact, the yearly premiums are frequently five to ten times higher for the same level of coverage, which can be prohibitively expensive for many. For many families, term life insurance is a wise choice because it is easier to maintain, more affordable, and reliable. Even term life insurance applications can be submitted online quickly.
Term versus permanent life insurance: Which is right for you?
When it comes to shopping for life insurance, the decision on whether to get a term or permanent policy really comes down to your personal preferences and budget for life insurance.
Term life insurance might be a good choice if you:
- Are looking for an affordable way to financially protect your family
- Are seeking coverage to help your partner pay your mortgage and other day-to-day bills if you were no longer around
- Need coverage to protect your financial dependents for a set period of time
Permanent life insurance might be a good choice if you:
- Seek coverage that lasts a lifetime
- Are seeking a product that includes a cash value component
- Want life insurance to be part of your long-term financial planning strategies
- Don’t mind paying a higher premium
When might term life insurance be deemed unnecessary?
A quality life jacket is just as useful as term life insurance, but not everyone requires one. If you fit any of the following descriptions, you might not need life insurance:
You might not need term life insurance if you have no dependents and no one who might be financially harmed by your untimely death.
You might not need life insurance if your spouse would be able to survive without you, your children are grown and financially independent, your mortgage is paid off, and all of these things are true for you.
Life insurance may not be worthwhile for you right now if you’re single, childless, and debt-free, but if you think you could be getting married or having a kid in the near future, it may be.
Thinking about life insurance? Why you may want to act no
The act of “buying life insurance” can occasionally seem to rank right up there with tasks like rolling over an old 401(k) or clearing your gutters of debris. Although you are aware that it must be done someday, you can feel as though there is never a “proper” time due to the perceived time and cost required.
Fortunately, contemporary technology has made it simpler than ever to get a term life insurance policy (and we’ve already demonstrated that coverage can be reasonably priced). You no longer need to locate a fax machine, scan documents, or print out pages of information in order to get life insurance. You can now apply for term life insurance online and get your approval status immediately. In some cases, if accepted, you may potentially begin.
Six steps to buying affordable life insurance online
Step 1: Use a life insurance calculator and get a quote
Unsure of the amount of life insurance you require? Try playing around with a life insurance calculator to get a rough sense. You may determine how much term life insurance coverage could be suitable for you and how much the policy will cost by providing information such as your age, income, general health, and family situation. Start by using our life insurance calculator online.
Conclusion
You may feel discouraged by those endless tasks. For peace of mind, crossing “purchase term life insurance” off your list is worthwhile. In addition, buying term life insurance is a cost-effective way to give your loved ones a financial safety net for the coverage period you choose, whether it be a decade or a number of decades, if you were to pass away during that time. This is in contrast to, say, remodeling your kitchen.
Is term life insurance therefore worthwhile? Even though there is no way to put a price on peace of mind, for many people, it means everything to know that you have taken steps to preserve your family’s finances. And you could discover that you can offer this safety for not much more than the monthly fee for your streaming TV or music service. Although term life insurance may not significantly increase your monthly expenses (which is a good thing), it can significantly increase your sense of security and assurance that your family is well taken care of.