For anyone supporting a family or loved one, the thought of what should happen to your loved ones after you pass away has probably crossed your mind. They could be left holding a very expensive bill for any debt you currently have, your funeral costs, mortgage payments or apartment rent until they can pack, sell the place, find a new one, and move, and much more. If you have children, it can be difficult for your partner to support the family without you, and still send your children to college or to support the children.
Term life insurance was invented to provide insurance for exactly these situations. The benefits are collected by your dependents if you die during the period in which you pay your monthly premiums to the company. It differs from other types of life insurance because it only covers you for a specific time period – (10) ten years, (20) twenty years, or (25) twenty-five years, for instance.
Some experts have argued that now is a good time to buy term life insurance as premiums and rates are relatively low, and you are guaranteed to continue paying the rate you “locked in” for however long your insurance lasts. If the rate increases over the next few decades as the population ages and has access to more money, you will continue paying this rate.
Is term insurance best for you? That decision can only be made by you and your financial advisor, but many advisors recommend this type instead of permanent insurance because it is less expensive, and you can invest additional money into guaranteed tax-free investments like an IRA or 401k plan by paying lower rates to this non-guaranteed plan that only pays out if you do pass away during the time period you are covered.
Life insurance term rates vary depending on your age, location, lifestyle habits such as smoking or drug use, and the individual company. Most importantly, these rates are constant, so you know exactly how much you will be paying every month for the life of the contract. You also know exactly how much your beneficiaries will receive if you pass away during the time period of your insurance while you are up to date with your insurance payments and they file a claim.
Like other types of insurance, term life insurance isn’t a surefire way to ensure your dependents have money when they need it. You do have to stay up to date with payments, and some insurance providers will not honor claims based on certain causes of death.
If you’re looking into term life insurance, consider getting an online life insurance quote from at least one reputable source. This can save you the trouble of visiting multiple insurance providers and submitting documentation to each, saving you both time and money. It’s easy to compare rates, and often you can get a lower rate online because providers know how easy it is for you to simply find another provider.
Term life insurance is a smart idea for anyone looking to protect loved ones after their death. It gives you fixed, low, affordable rates for a certain length of time and your beneficiaries peace of mind.