Temporary insurance is also known as term insurance . Policy owners will be able to use the right policy for the right temporary need. Some needs are temporary while others are long-term. There are also permanent life insurance needs that will last the rest of your lives. Permanent policies are required if you have a need that is permanent. These policies can be universal, variable universal, whole life, or variable life. There are many types and styles of term insurance policies. Let’s examine the need and decide which policy is best.
Your Mortgage
Insurance is required if you have a mortgage on your home. A homeowners policy should provide enough cash to rebuild or repair your home in case of damage from fire, flood, or other natural disasters. A disability insurance policy should also be considered. It would cover a portion of your income in case you become disabled. It is a good idea to pay off your mortgage in the event you die prematurely.
Temporary need can be defined as mortgage that you have for a certain period of time. To meet this need, most people purchase decreasing term life insurance. For example, you might buy a 20-year decreasing term policy if you have a mortgage. The death benefit also decreases with decreasing mortgage balances. The term insurance proceeds will pay off the mortgage balance upon death.
Repayment of a Loan
Let’s say you decide to buy a car. A small down payment is required. This will be paid off in approximately five years. The bank will repossess the car if you die suddenly. It would be a good idea to purchase a 5-year term insurance policy that covers the car’s amount. The amount owed upon your death will be paid. Any money owed to the policy will be paid off by the beneficiary.
Protecting A Young Family
The death of the breadwinner is one of the most difficult experiences that a young family can experience. You are in your twenties, married. Your wife is approximately the same age as you and you have two children, ages 3 and 1. Your wife is a college graduate, but you decided that your wife would remain home and care for the children while she was at work. You are struck by the negligence of a drunk driver and killed in an automobile accident.
Imagine the future for your family. Final expenses must be paid. You will need to pay court costs, attorneys fees, and burial costs while your spouse and children continue to live. Utility payments, rent or mortgage payments, as well as utility bills, will need to be paid. Maintenance of the family until they are able to fend for their own financial security will be the biggest expense. These things can all be covered by a well-thought out policy that covers 20 or 25 years.
A term insurance policy can be set up to pay a lump sum upfront to meet immediate needs. The income you receive from the balance would be equal to your current income for a specified period. The term insurance income would continue until your children graduate college. You could set it up to provide an income for your spouse as long as she lives.
