As with all life insurance policies, you pay premiums on your policy every year. But with term life insurance you pay premiums only for the length of the term. When the term ends, your premiums end, and so does your coverage. That means, if you were to die before the end of the term, your beneficiaries would receive the death benefit.
Because term life insurance provides coverage for a set period, it is easy to understand and is often the most affordable option, making it one of the most popular types of life insurance.
Lower premiums give you the ability to meet your financial obligations today, while still protecting your family’s future tomorrow. So while you continue to save for college, pay your mortgage, take family vacations, and do all the other things families do, you can rest easy, knowing that should the unexpected occur – the mortgage, college and even funeral costs will be covered.
There are three components of term life insurance policy that you should know:
- The death benefit is a lump sum of cash paid out by the life insurance company when you die. If you’ve ever heard someone say, “I took out a one-million-dollar life insurance policy,” that one million dollars is the death benefit.
- The beneficiary is the person or organization that will receive the death benefit. The beneficiary doesn’t need to be a family member or even a human being—it can be a trust fund, or a non-profit organization, or a business partner. You can have multiple beneficiaries who split the death benefit, and you should always have a backup beneficiary in case the primary beneficiary isn’t able to accept the death benefit for some reason.
- The term is how long the policy is active for. It’s called “term” because the policy lasts a set amount of time and then expires, after which you will no longer be covered by it. You’ll have to buy a new policy or renew the old one before it expires if you want to remain covered after the initial term.
What you should know about term life insurance?
- Provides financial protection for a specific period, usually 1 to 40 years.
- Often used when you anticipate your family’s need for coverage lessening in the future, such as children growing up and becoming financially more independent.
- Term life insurance premiums are generally more affordable during the level premium paying period, which can be a budget-friendly way to provide death benefit coverage for the period you need.
- A more affordable option compared to whole or permanent life.
- Does not build cash value.
- Easy to understand and manage.
- Offers fixed, level premium payments.
- A level premium and death benefit for the length of the term.
- The option of renewing coverage when your term ends (typically resulting in a higher premium and possibly a reduced face amount).
A legacy for those you love…
The death benefit from a term life policy helps replace your income for your beneficiaries if you should pass away within the term of your policy. Your loved ones can use the money to pay off debt, support living expenses, or help fund necessities like college, retirement, even life insurance policies to create a legacy of their own.
Term life insurance can help ensure that your loved ones will be protected. Our simple, process not only lets qualified applicants get an immediate quote and apply for coverage, but a medical checkup may not even be required. Find out how term life insurance can help safeguard and celebrate your family’s financial future.
Balancing Cost and Coverage
Most insurance carriers offer a catalog of discounts that can help you save on the comprehensive coverage you need. Working with an independent insurance agency can help you assemble the best coverage options from a variety of top-rated carriers. If you’re looking to maximize your insurance coverage while keeping costs in check, work with National Advisors Group today to complete a free Personal Risk Review.