Do You Need Term Life Insurance?
Term life insurance can offer your family many benefits. Before you decide on a policy, you should determine your specific needs. Knowing more about this insurance option will help you find an affordable term life insurance plan with the benefits you want for your family.
The Benefits of Term Life Insurance
Term life insurance can be purchased for the specific times in your life when you need some extra insurance. Since you are not expected to keep the policy for your entire life, the they are often cheaper than whole life insurance options because there is a smaller chance that your family will actually need to use them. In comparison to the alternatives, many industry experts argue that whole life policies are not the best investment as the return on investment is very low. Thus it might make more money by investing in the term life policy, as it is cheaper, then use the excess to invest in stocks or a different long term investment.
The Disadvantages of Term Life Insurance
While it is something you buy hoping to never collect on , one of few disadvantages of term life insurance is that you can only get a return on your investment if you die, unlike whole life which gives a return at the end of the policy regardless if the party is living or deceased. Some insurance companies will give you the opportunity to extend the term of coverage, but the rates can become much higher and discourage consumers from continuing their coverage.
Who is the Audience for Term Life Insurance?
Term life insurance policies are useful for families that significantly rely on the incomes of one or two people in the household. Typically, couples buy term life insurance when they have children and need to take their financial well being into account. If one of the parents dies before the child is grown, the other will get money from the policy to help raise the child and pay any expenses.
As your children grow up, though, you might not need the extra insurance (although sometimes life insurance for seniors might be necessary). They can take care of themselves, so there is not a reason to continue paying for the term life insurance. Likewise, at this point in your life you are probably more financially secure. If you suddenly died, your spouse might be able to live without your monetary contribution much more easily than when you were younger and had children in the house.
As with any investment, it is best to take into account all factors that surround it (including how much life insurance do you need?) to ensure that you will receive adequate coverage for the investment.
