The basics of term life insurance.
For many, they know they need life insurance. However, what many don’t realize is that there are two main types of life insurance that they will need to decide between. Term life insurance is designed to cover individuals for a dedicated amount of time, say 5, 10, or 30 years. Whole life insurance is permanent coverage lasts for your entire life. If you are unsure about how term life insurance works, read on.
If your family relies on your income, life insurance is an important part of planning for your family’s future. It’s grim, and no one likes to plan for their death. However, a little discomfort now can save your family a world of financial stress should the worst happen.
How does term life insurance work?
In general, life insurance is purchased to replace your income if you die so that your family can continue their same quality of life. In addition, life insurance covers remaining debt, funeral expenses, and ensures your family’s financial goals can be achieved. Term insurance covers all of this – however, it is for a predetermined amount of time. If you outlive your policy term, the insurance terminates and you must buy another policy if you still want to carry life insurance.
In term life insurance, the death benefit amount you choose at the start of your policy doesn’t have an assigned use. Typically, these funds are used to cover funeral expenses, debts, mortgage, replacement income, and other ways that the beneficiaries see fit.
How do I choose the right term life insurance policy?
Determining which term length you should buy requires a review of your debts, financial needs, dependents’ needs, and when all of those responsibilities might change. Here are a few tips:
- Review your circumstances and determine when/if your lifestyle or situation may change. For example, if you have major debts ending soon or kids growing up.
- Shop around for life insurance quotes.
- Read the fine print carefully.
- Answer all the application questions accurately. Insurance fraud is a serious crime.
- Maintain your list of beneficiaries and don’t wait to change them if necessary.
For more information on how you can get the correct amount of life insurance coverage for your family, contact the Bristol team at C.V. Mason Insurance Agency.