Life is full of changes—like buying a new home, welcoming a child, or shifting careers. These milestones can prompt us to reassess our financial priorities, and that's where term life insurance comes into play. This guide is here to help you understand how term life insurance works and why it might be the right move for you, whether you’re considering your first policy or thinking of expanding your coverage.
What is Term Life Insurance?
Term life insurance is one of the simplest and most affordable types of life coverage. Here’s how it works: you choose a term length—10, 20, or even 30 years—and a coverage amount. If you pass away during this term, your beneficiaries receive a tax-free payout, providing financial peace of mind during challenging times.
Common Uses for the Payout
The death benefit from a term life policy is often used to cover mortgage payments, funeral expenses, everyday living costs, or even college tuition. This support can help ease the financial burden on your loved ones.
Options for Term Policies
There are various types of term policies to consider:
- Level Term: Premiums and the death benefit remain constant throughout the policy.
- Yearly Renewable Term: While coverage renews each year, premiums increase as you age.
- Decreasing Term: Commonly paired with mortgages, where the death benefit decreases over time but premiums remain stable.
Additional Features to Consider
Some term policies offer extra benefits:
- Return-of-Premium Rider: This option allows you to get your premiums back if you outlive the policy term, though it comes at an additional cost.
- Convertible Term: This feature lets you convert your term policy to a permanent one without the need for a medical exam, offering more flexibility as life's circumstances change.
Why Act Now?
With 102 million U.S. adults lacking adequate life insurance, and rates on the rise, especially for older adults, it's wise to consider term life insurance sooner rather than later. Many overestimate the cost of term life, with studies showing that 72% of Americans think it costs more than it actually does.
When to Reassess Your Coverage
If you've taken on new debts, expanded your family, lost employer-provided coverage, or experienced a change in income, it might be time to look at your existing term life policy. Layering coverage could also lock in lower premiums while you’re younger and potentially healthier.
Remember, life doesn’t remain the same, and neither should your insurance coverage. Affordable and effective protection is within reach, and small steps today can bring peace of mind tomorrow. We encourage you to assess your current situation and speak with a licensed insurance advisor to explore term life insurance options that meet your needs.
