Secure Your Family's Future with Term Life Insurance

Term Life Insurance is designed to protect you and your family for a specific period of time. These specific terms are usually anywhere from 10-30 years. Term Insurance is a straightforward option for providing lots of coverage at a very affordable cost.

It might be the perfect option if you're looking for a reasonably priced way to protect your family. It provides temporary coverage at a fixed price, making it affordable and flexible. Considering both the advantages and disadvantages before investing in a policy is essential.

What Is Term Life Insurance?

Term Life insurance is a legal and binding contract between the policyholder and an insurance company. These policies usually have a length of time clause ranging somewhere from 10-30 years. Should the policyholder pass away during this specified period the insurance company will pay the specified sum of money to the beneficiaries of the policy holder. A good life insurance policy will also include LIVING BENEFITS, these offer coverage for things such as chronic, critical, and terminal illnesses such as heart attacks, strokes, or cancer. They can also be used for long term care. 

During the specified term the policy holder typically pays a level premium into the policy and if anything happens to the policy owner the policy will pay out what is called the death benefit.  Triggering events for a payout can also include such things as critical illness, disability, and long term care. Which means that you could get money while you are still alive to help pay for what could be catastrophic medical and long term care expenses.

Policy Characteristics

• Affordable 
• Temporary coverage for a specific period
• Flexible 
• Policies have no cash value
• Canceling the policy means you won't get any money back-unless you have a special rider called a return of premium (this does increase the cost of insurance)
• Renewing or getting a new policy after the initial term may result in higher premiums

Why Is It Attractive?

Many people find term life appealing because it offers significant coverage at a reasonable price. Unlike permanent life insurance policies, term life policies have no cash value and are less expensive in terms of paying for death benefit  than whole life insurance.  Added on top of that all proceeds from life insurance are tax free.  Which means that your loved ones get everything that you wanted to leave them.

Term Life Insurance offers flexible coverage from annual renewable terms all the way up to 30 years. It is designed for and meant to help individuals and families cover the costs of living should you lose your ability to provide for your family due to death or critical illnesses. The money can be used to pay off mortgages, fund children's college tuition, or help reestablish your life after the crushing loss of a loved one.

• Premiums are usually fixed during the term period.
• Young families usually utilize term life insurance for financial security in case of tragedy.
• The cost of the policy is directly related to age, health, and life expectancy.
• Individuals can purchase term life insurance from different demographics.
• Young families can get term life insurance for financial security in case of a parent's death.
• Older individuals can buy a short-term policy to cover debts before retirement.

Current market trends also drive more people to purchase term life policies. 

• Many want to financially protect their families due to healthcare costs and job insecurity.
• Term life insurance is affordable. Term insurance is the lowest cost for the highest payout. 
• It does not require long-term payments or significant up-front investments.

How Does It Work?

Decide how much insurance you need by following one the 4 calculation methods, DIME, 10x annual salary, 4% rule, or $50,000/child/year until 18, college tuition costs, and payoff mortgage.

• Submit application including health questionnaire and possible paramedical visit from a nurse.
• Get coverage from your chosen insurance carrier.

After getting approved and having a policy in place, should anything happen to the policy holder the specified beneficiaries will submit a claim to the insurance carrier and will be paid out the death benefit.

If the policy owner has a triggering event while they are alive that is covered through the critical, chronic, terminal, disability, or long term care sections of the policy the insurance carrier will pay out the specified portion of the death benefit to the policy holder.

Benefits of Term Life Insurance

• Term life costs less than other life insurance policies. Term policies are seen as a lower cost of insurance when compared with other types of life insurance.
• It provides financial security for those who want less expensive options.  There are millions of Americans for whom term life insurance is the right fit.
• Depending on the policy and the carrier they can be converted into a permanent life product during the term without requalifying medically.
• Life insurance benefits go directly to the person or people that you stipulate not through probate.

Potential Drawbacks

• Term life policies cover a specified term. Term life policies are like paying rent, at the end when you move out you don’t get any money back.
• You must purchase another policy to maintain coverage if you outlive the term.  And your new term is going to be rated on your new age and health status.
• No cash value with term life policies. 
• They cannot be used as an investment vehicle or borrowed against like other types of permanent life insurance policies.
• Less than 70% of all term policies pay out the death benefit.

The Pros And Cons

Pros

• Low Cost: Term life is typically less expensive than permanent policies, making it an attractive option for those on a budget.
• Flexibility: Term life policies are customizable to meet specific needs and timelines.
• Large Death Benefit: Term life policies can provide considerable death benefits at relatively affordable rates.
• Easy Application Process: Getting quotes and applying for term life is straightforward. And in a lot of cases are instant issue, which means no waiting
• Peace of Mind: Knowing that your family will be cared for financially if you die brings peace of mind to policyholders.
• Can be converted during the term period into a permanent policy without having to qualify medically.

Cons

• Rental Policies: Term life policies only last for a set period of time (usually 5-30 years). Outliving the policy means no benefit upon death.
• No Investment Component: Unlike some other types of life insurance policies, term life does not build up cash value over time or offer any investment options within the policy itself.
• Escalating Premiums: As you age, premiums will increase significantly with each renewal period, making it difficult to maintain coverage over time without increasing costs significantly.  Added to that every new term you have to qualify for medically
• Complicated Qualification Process: For those with significant health issues or pre-existing conditions, qualifying for term life insurance may be difficult or impossible due to medical underwriting requirements from insurers.
• No Tax Benefits: Unlike some other life insurance, term life has no tax benefits.

Factors To Consider When Purchasing

Consider several factors, including age, dependents, and financial goals:

• What would happen to your family if you could no longer provide for them financially? And also what if something happens to your spouse or partner, will you still have to go to work to provide?  What about your kids?
• How much money are you willing to spend on a policy or for coverage?  
• Who are your beneficiaries going to be?
• How much $$ do you need in your life insurance?

Key Takeaways

Regarding financial security, buying a term life insurance policy is an option for the budget-minded investors who aren’t ready for the financial leverage that permanent life insurance policies can offer. It's essential to remember that it is temporary and won't accumulate any cash value over time.

It's crucial to consider variables like:

• Age and health
• Number of dependents
• Financial goals

Don't wait any longer - schedule a meeting with our team today. With our expert advice, you can make informed decisions about your investments and ensure that you protect your assets from potential risks or disasters.

Author: Royal Legal Solutions