If you need affordable life insurance protection over an extended period, such as until your children are grown or your mortgage has been paid off, consider purchasing a 20-year term policy. Learn about its coverage quickly and receive a free quote within minutes!
Term policies provide temporary coverage that only pays out death benefits if someone dies during that specific timeframe, and are usually much cheaper than whole life policies that offer lifetime coverage and build cash value over time.
Coverage Needs
Basic term life policies provide coverage for 10, 20 or 30 years at fixed premium rates, and should you die during that time, the insurer pays out a tax-free cash benefit to your beneficiaries. Term policies tend to offer the lowest premium rates.
How much coverage you require will depend on your individual circumstances; as a general guideline, however, consider having enough coverage to pay all outstanding debts such as mortgages, car loans and credit card bills as well as any final expenses you may leave behind – such as funeral and burial expenses or university tuition payments for your children. In addition, consider insurance to cover future expenses like college education.
Consider how long you want the policy to last before making your selection. Many choose an amount that will cover their children until they move out on their own and start paying their debts off; others purchase coverage that will last them until retirement and living off of savings alone.
Length of term should reflect your goals and plans for the future, for instance if your plan involves working until age 70-80 then shorter terms would likely suffice as there will likely be enough retirement income to cover expenses at that point.
Typically, the longer your term, the higher your monthly premium for any particular amount of coverage. That is due to insurance companies needing to evaluate your risk and whether or not you will still be alive when its term comes due.
Therefore, most insurers require a medical exam and request information about your lifestyle and occupation to assess if it can reasonably be expected that you’ll live long enough to justify taking on the cost of their policy. If your hobbies include activities with potential risk to life or work involves tasks which could endanger others’ safety, your rates could increase accordingly.
At its core, the best way to determine how much term life insurance you require is speaking to a financial professional. They can assist in assessing your needs and comparing different options in order to find one that fits into your budget perfectly.
Term Length
One of the key decisions you’ll have to make when purchasing term life insurance coverage is how long you want coverage to last. A common rule of thumb suggests purchasing coverage until your children reach adulthood and you retire – or 20 years, from when your children become independent to when you reach retirement age. Your term length choice will also have an effect on premium costs; longer terms typically cost more due to increased health issues with age.
Keep in mind that, unlike whole life insurance, term life policies don’t accumulate cash value over time if you outlive your term; thus limiting what beneficiaries receive upon your death as opposed to providing them with any inheritances.
Term policies typically range in length from five to 30 years. Five year policies may be best for short-term financial obligations like loans and college fees. Ten or 15-year policies can provide families with sufficient coverage until their children have graduated from high school; 20 year term policies tend to be most popular with Haven Term customers in their early to late 30s who want coverage until both their mortgage has been paid off and children have graduated college.
For those seeking long-term security, a 30-year term policy might be the solution. But this decision must be carefully considered since your needs will likely evolve over three decades.
Based on your circumstances, whole life insurance may be more suitable than term policies for you. Although more costly upfront, whole life policies provide lifetime coverage while building cash value over time and often can even be converted back to term policies if desired. Consult a life insurance agent who can assist in selecting the optimal policy type to meet your unique needs.
Premiums
Term policy life insurance is one of the easiest forms of life coverage. Simply pay an annual premium over 10-30 years and, should your death occur during that period, an insurer pays out an undistributable death benefit that’s usually not tax-exempt and may be used to settle medical and funeral costs, outstanding debt, or any other financial obligations.
Dependent upon your individual coverage goals and needs, you may require either a large or small payout in order to meet your family’s financial requirements. As an easy estimate of this figure, an approximate rule-of-thumb would be 10x annual income; though this method provides quick results. It is wiser to assess all aspects of your own situation carefully prior to settling on an insurance coverage amount.
when estimating how much coverage is necessary. You should take into account potential expenses or changes to dependent plans when estimating how much coverage is necessary. An increase in coverage amount provides greater flexibility as you adapt to changing situations and can assist your family cover additional costs such as unexpected debts or education expenses.
As part of your term life insurance needs analysis, it’s also crucial to take your medical history into account. Preexisting conditions or bad habits like smoking may increase the cost of life insurance premiums; additionally, policies with longer terms or higher death benefits typically have higher premiums.
Timing your purchase of life insurance can also play a key role. Purchasing early can make life insurance more cost-effective since rates and waiting periods tend to be lower; on the other hand, purchasing late may prove more costly as you will likely require medical exams as well as possibly developing health conditions that affect its cost.
Purchasing term life insurance may seem intimidating at first, so we suggest speaking to an independent financial professional for guidance on when or if to buy. They will guide you through calculating your coverage needs, comparing benefits between term policies, and helping determine whether premium payments make financial sense.
Riders
Many life insurance policies come equipped with various riders that enable you to customize coverage to your unique needs. A common example is a return-of-premium rider, which reimburses any premiums at the end of your term; other riders enable conversion to whole life or an increase in death benefit in certain instances.
Conversion riders provide you with an opportunity to switch from term life insurance to permanent whole life, typically without taking an exam but with higher premiums.
If you need assistance selecting permanent life insurance, speak with an agent or financial professional licensed in this field to help identify all available policies. It may also be a good idea to consult your physician and ensure the policy selected meets all your individual needs.
Your beneficiaries in your life insurance policy will receive its proceeds after your death, such as your spouse, children or any other loved ones you select – or it can go toward charity or trusts – so it’s crucial that you choose those best equipped to safeguard the long-term financial goals of your family.
Paid-up additions riders enable you to add additional coverage without taking an invasive medical exam – making this option particularly appealing for parents who want to ensure that their children can benefit from an increased death benefit if either parent passes early on in life.
Guaranteed insurability riders allow you to purchase additional coverage at specified life milestones (typically every three or five years) or within 30 to 90 days after significant events like getting married.
An accelerated death benefit rider provides faster payout to beneficiaries in the event of terminal illness; and a waiver of premium rider can waive monthly premium payments should disability or unemployment occur.
