Getting term life insurance for yourself is one of the best decisions you could make, especially if you’re the breadwinner in the family. Unfortunate events, such as death, might knock at the door unexpectedly—and life insurance could act as your defense.
So, how does this insurance plan offer protection upon your passing? How can you benefit from it when you’re already dead? The truth is, it’s your family who will benefit the most from it. It just comes with a bonus called peace of mind—you’ll leave the world in peace knowing that the family you’ve left won’t live in debt because of your death.
Does that sound great to you? Carry on reading as we discuss term insurance more, its coverage, and benefits you could get from it.
More About This Life Insurance Policy
In its simplest, term life insurance is a type of policy that provides coverage for a limited number of years or a specified “term” of years, whether it’s five years, ten years, 20 years or 30 years. In short it is a long term insurance plan that cover lots of things in our life.
It’s straightforward insurance that doesn’t build cash over time but offers a death benefit for the beneficiary when the policyholder passes away while it’s in force.
There are several types of term insurance, including level term plans, yearly renewable term plans, and decreasing term insurance. Here’s how these plans are different from each other:
- Level term insurance – provides coverage for a specified period ranging from 10 to 30 years. It highlights death benefit as an irrevocable part of the policy. In this plan, both the premium and death benefit are fixed.
- Annual renewable term insurance – is a type of policy with no specified term. It can be renewed each year without providing evidence of insurability. However, the premiums increase as the insured get older.
- Decreasing term policy – is a term plan with a death benefit that declines each year. The policyholder pays a fixed, level premium for the duration of the policy.
“Why get a term policy if it only promises death benefit money and not lifelong protection?” If this question keeps running through your head, read on. Term insurance is quite a good option, and you’ll realize it once you read its key advantages below.
Advantages of Term Insurance Plans
1. It’s Less Expensive
Term life insurance premiums are generally lower than permanent life because it provides protection for a predetermined time. Most people find the term policy the best alternative to a permanent policy if short-time frame needs are a concern.
Despite the absence of a cash value component in term insurance, younger clients may consider it a practical option. Young parents, in particular, may acquire substantial face amounts of coverage at relatively low immediate cost. How good is that? They’re insured at a low rate and can save up for their kids’ college, their retirement, and pay other expenses.
For a small amount of money, you can protect your financial dependents, replace lost income, and help your family pay your mortgage or other bills even if you’re no longer around.
2. It’s Designed for Flexibility
Term insurance is also designed for flexibility. With the varying types of coverage—from as little as one year to annual renewable term, and 10-,15-,20, and 30-year terms—you can find this insurance easy on the pocket.
What’s also ideal about term plans is that they can be converted into permanent policies. When you decide on switching to permanent life insurance without going through another health screening. There wouldn’t be a problem as long as you understand the implications of the conversion.
Here’s even better news: the conversion features of renewable and convertible term policies provide higher death protection. You may receive higher death protection, enjoy lock-in premiums, and build a cash-value account, which they access and borrow money from.
3. It Provides Financial Protection
As with other insurance types, term life insurance can provide financial protection. People who have loved ones financially dependent on them (i.e., partners, parents, siblings, or children) can benefit from a term plan in many ways.
And if you don’t have financial dependents yet, term insurance still offers a big help in covering the costs of your death. The payout from your policy can safeguard the financial health of your loved ones and cover many financial obligations. The death benefit cover can assist with things, including:
- pay medical bills
- funeral expenses
- pay outstanding debts
- pay living expenses and mortgage
- fund your child’s college expenses
- basic needs, like food and childcare
The Takeaway
Shopping for life insurance isn’t something that you can do impulsively. It requires thorough decision-making, where you must weigh many things, such as your personal preferences and budget.
If you’re looking for an affordable way to financially protect your family or dependents for a set period of time, term life insurance might be the perfect choice for you.
