Term Life Insurance - Is It Your Best Choicce?
I know a lot of people who say they are thinking about purchasing life insurance
, but have not really done anything about it. They say they know they should have a policy, but think it will be difficult or expensive to buy it.While professionals spend a lot of time learning about all of the different types of life policies, it is very simple to grasp the basics.
Lots of people consider term policies. Let us look at some features of term policies.
Term life has no cash value. Also unlike these permanent policies, term policies end after a length of time (the term). It is considered pure insurance. These are the basic reasons why term is cheaper.
The advantage of a term policy is that it allow you to buy more coverage at a lower price. Because it will expire after a term, people generally use it to cover themselves for a period of time they will need to meet some financial goal. Some examples of this are paying off a mortgage or raising and educating kids.
Some term policies have an option to covert to permanent life insurance before the policy expires. This option also allows the individual to convert without having to show evidence of insurability. Say, for example you purchase a 20 year term policy. You can take advantage of this feature to change your mind later. You could, for example, change the policy to whole life. You will not have to answer health questions or take a medical exam. This is a good way to hedge your bets. Buy term now, and then have an option to convert to whole life later so you have retirement life insurance.
You may not know that you can find a feature in some term policies that solves the issue of the policy expiring and not building up a cash account. You can find some policies with a return of premium (ROP) rider. This costs a bit more but it refunds all of your premiums at the end of the policy. This can really add up. Let us say you purchase a 30 year term policy for $30 a month. At the end of the term, if you survive, you will get a check for over $7,000 back!
Term life will allow you to buy a larger policy for a lower premium. It is just important for you to understand what you are buying, and also to think about your options after the policy expires. So your policy may end in 20 years. Of course, you will have aged, and you also risk having more health issues so you may be more expensive to cover.
How can you find a good term policy?
We compared term policies for an individual. This man was shopping for a hundred thousand dollar policy that would last twenty years. Even for this modest face value, the insurers price quotes varied by quite a bit. I found that yearly premiums varied by three hundred dollars. Over the whole 20 years, that would be a $6,000 difference.
So it is important to compare term life insurance quotes before you buy.
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