Term life insurance was actually the first type of life insurance people could purchase. Its main function is to make sure those you are leaving behind are taken care of for an extended period of time, until they are able to get onto their own feet; think of it as a kind of a buffer. It should never be considered in terms of estate planning, or as an actual income replacement, just as a helping hand. What is good about term policies though, is that actual calculations go into the deciding amount here; whole life policies typically make assumptions about what may be needed after you are gone, whereas term policies actually make sure the right amount is paid. As mentioned, it will eventually run out, but the person or persons can renew their policy; they typically will receive different premiums, but they can still get something.
How Will This Benefit My Family And Loved Ones?
It benefits them greatly; say if your death is completely unexpected and your family is left behind with little to no income after, they will not be ok because of your life insurance. Any debts, mortgages, housing costs, education costs, and funeral costs are going to be covered, and they will be able to stay afloat at least for a good amount of time. When it comes to the educational costs, that insurance money could be put away into a college fund, benefitting your children to a huge extent.
Another benefit to choosing term life insurance over whole life is the fact that it is always less expensive. So, while you are making payments on your term insurance and accruing interest on it, you are still spending less in the long run, and creating a good payout amount in the end. You can even make larger payments each month, and that extra amount will be tacked onto the overall payout– also a big benefit for your family.
Most term life insurance policies, if not all of them, are income tax free. So this means when your loved ones are receiving payments, they are actually receiving the full amount, or near full amount. You will typically get more for your money when going with a term life policy plan.
So, if you have even slightly considered purchasing life insurance, do it now. It is not something you should procrastinate on, because the longer you hold onto a policy, the more it will benefit you and your family in the long run.
Agent Terry Johnson sells insurace in the state of Tennessee when not blogging or writing on his novel.