Is Term Life Insurance Right for You?

September 12, 2022
Life Insurance

According to a recent study done by LIMRA’s Life Insurance Barometer, “there are 102 million uninsured and underinsured Americans who know they need (or need more) life insurance coverage” and yet, only 52 percent actually have it. But then the question becomes, what form of life insurance is right for you and your family and could it be term life insurance?

Life insurance, by nature, has been designed to act as a financial safety net for your family in the event of your death. But when researching the differences between whole and term life insurance policies, the options can seem confusing.

What is the difference between Term Life and Whole Life Insurance?

When most people think about life insurance, they are more than likely thinking about whole life insurance. Unlike term life, whole (or permanent) life insurance is for your entire life span or up to age 100 in some cases, whereas term life is designed to provide coverage for a pre-specified period of time often ranging anywhere from 1 to forty years.

Cost is another key difference between the two policies. While most whole life insurance policies tend to have a higher premium from the start, many times your rate will not go up. Term life insurance, on the other hand, determines premiums based on the age of the policyholder, therefore a policyholder in their forties, for example, would have a higher premium than an individual in their twenties.

Whole life insurance also accumulates a cash value over time that grows at a guaranteed rate and is tax deferred. As the policyholder, you are able to borrow against the policy but you must be ready to pay the money back with interest. This is a feature of whole life insurance that term life does not offer.

Why Term Life May Be Right For You

While term life insurance might not be right for everyone, it may end up being a better fit for you, your budget, and your family when compared to whole life insurance.

Due to the fact that term life policies tend to be less costly overall (especially for those in younger age brackets), they might make more sense for new or growing families. Many who opt for a term life policy are entry to mid-level in their careers and may not have the kind of saving habits or capabilities to cover their family or debts in the event of an early death.

With a term life policy, your payout benefits could give your family and dependents the financial support they would need to not only pay for funeral expenses, but also supplement the loss of your income, and help put your children through college in the event of your death.

As term life policies generally provide you with coverage for a pre-specified period of time, once your term of coverage is over, the policyholder would then need to renew their current policy at higher rates or seek out a new life insurance policy should they wish to maintain their coverage.

Ultimately the decision between term life insurance and whole life insurance is a personal one and should be discussed with your family, agent, or both. When you truly examine your finances and current situation, you may find that a term life insurance policy would be a better fit for you in the long run and save you money in the short-term.

Are you ready to learn more about the Term Life policies that are available to you? Visit our term life insurance page for more information, or contact us to speak with a benefits counselor who can assist you.

4 Questions to Ask When Purchasing Term Life Insurance

September 13, 2021
Life Insurance

Once you have determined you need term life insurance, it’s time to choose a policy. Be aware that many policies differ on certain points, so you’ll want to ask a few important questions before purchasing a plan. The following questions can be answered by your agent or found within the information that has been provided to you concerning the policy.

How Long Should My Policy Last?

Term life insurance policies last for a specific amount of time — most policies last for 10, 20, or 30 years. Your decision on which length of time to pick depends on why you need the life insurance in the first place. Some people purchase term life insurance just to make sure that short-term debts would be covered in the event of their death. Other people are looking to take care of long-term obligations such as paying off a mortgage or putting children through college. For these types of goals, a 20 or 30-year plan can be more beneficial. Insurance providers offer a variety of terms to help meet the individual needs of each client. This makes it easy to find a plan that fits your particular goals and needs.

What are the Exclusions?

All insurance policies will have exclusions or special circumstances that could affect your family’s ability to receive payments at the time of your death. Some exclusions can nullify your death benefits altogether. These exclusions will vary from carrier to carrier, so it is important to ask specifically which exclusions are included in the policy you are reviewing.

Some of the most common exclusions are suicide, dangerous hobbies or occupations, an aviation exclusion, and an act of war exclusion. Hobbies are one of the most varied types of exclusions, so make sure you check the details on this if you participate in any hobbies that could be deemed risky.

What Happens When My Policy Expires?

Because term life insurance policies are for a set period of time, most individuals who purchase them will live to see their expiration. If you think you may want to continue having life insurance coverage after it expires, you’ll want to review the options for continuing your coverage on the chosen policy with your agent. Certain term policies have a renewable or convertible benefit to make sure you can continue life insurance coverage in some form once it expires, even though you’re older and possibly in a different state of health than when you first bought your term policy.

What If I Can’t Pay My Premium?

Although your premium might seem affordable now, if your financial situation changes in the future it might be difficult to pay your premium. You should be aware of the consequences for missing payments on the policy in question. Each carrier will have different types of penalties for lapsed payments. You should only purchase a policy with consequences you can live with.

Purchasing term life insurance is a great way to help ensure your family’s financial security. Review term life plans available to you as a benefit of your membership.