Term life insurance is definitely an essential part of any financial plan, but most people don’t really understand how it works or why they need it in the first place.
If you’re one of those people, you might be wondering why you should get term life insurance in the first place.
We’ve listed 7 Reasons You Need Term Life Insurance, plus here that should make your decision easy and help you get started with a plan of action!
1) Death is unpredictable
No one wants to think about the day when their life will end. It’s something that we all know will happen someday.
But what we don’t always realize is that there are a number of steps you need to take in order to protect your family from the financial repercussions of your death.
One of those steps is buying term life insurance.
Term life insurance policies cover you for a set amount of time, which means they’re much less expensive than permanent plans.
And with this type of coverage, you’ll receive benefits no matter how old or young you are when the policy expires.
The downside is that if you let your coverage lapse, then it’s as though you never had it at all because any money collected would go back to the insurer and not to your beneficiaries.
That’s why it’s important to periodically review your plan to see if your needs have changed, as well as shop around for a new provider if needed.
The decision on whether or not you should get term life insurance should be made after careful consideration with an advisor who knows about these policies.
2) Your family will need financial support if you die
Term life insurance is the most affordable type of life insurance and it can provide financial support to your family if you die.
It’s a lot cheaper than permanent life insurance, so you might want to get term coverage now and then move on to permanent coverage once you can afford it.
Your beneficiaries will need income in case you pass away before they’re fully grown.
If you have children or dependents who rely on your income, they’ll need money from term life insurance to live when you’re gone.
3) You’ll also need money for burial expenses:
With a plan for burial expenses in place, your loved ones won’t have to worry about whether or not they’ll be able to take care of this burden themselves.
4) Your survivors will need financial help with future plans:
Plans like retirement, college tuition and weddings are expensive.
There may come a time where your spouse needs help paying off debt even if something unexpected happens to you.
5) Term life insurance is more affordable than you think
Term life insurance is an affordable way to protect your family and loved ones from the burden of your death.
Unlike whole life insurance, term life insurance does not require a cash payment up front but rather has a fixed premium that can be paid monthly or annually.
Here are 3 reasons you should consider term life insurance as a form of protection:
– It’s more affordable than you think.
– It offers tax-free growth.
– No medical exam is required. – Coverage starts immediately with no waiting period.
Guaranteed renewable for as long as you pay premiums unless the policy is surrendered.
Remember, term life insurance doesn’t build equity like whole life does; it just provides guaranteed coverage for a set amount of years .
The downside is that if you’re sickly and need coverage past the end of your set number of years, you’ll need to go back and get a new policy.
6) It’s easy to get coverage
Term life insurance is an affordable and simple way to get the financial security you need.
With this type of coverage, you pay premiums for a set period of time and receive benefits if you die during that time frame.
This can provide peace of mind knowing your family will be cared for in the event of your death.
If you have kids, it’s important to make sure they’re covered too since accidents happen every day.
Your age is a big factor when looking at term life insurance because the older you are, the higher your premium would be and vice versa-the younger you are, the lower your premium would be.
The average person between 18-25 years old should plan on paying about $14 per month with a benefit amount up to $250,000 (but could vary based on the company).
For those over 65 years old, expect to pay about $200 per month with a benefit amount up to $500,000.
7) You can use term life insurance for more than just death benefits
A term life insurance policy is an important part of protecting your family’s future.
The death benefits are just one of the many ways you can use a term life insurance policy to secure your family’s future.
It’s also important to make sure that your beneficiary designations are up-to-date and that you have an estate plan in place.
For example, if you don’t designate anyone as your primary beneficiary, the proceeds from your life insurance will go into what’s called an intestate succession.
If you don’t have children or other heirs who could inherit from you, state law dictates how those funds will be distributed.
State law may dictate that these funds go to charities or hospitals instead of individuals something that might not align with what you had hoped for or wanted for your beneficiaries.
By ensuring that your beneficiary designation on your life insurance matches up with your will and any additional estate planning documents, you can avoid this situation.
Conclusion
Your family should always know where they stand financially, which is why it’s so important to protect them through different types of assets like home ownership, business ownership and retirement plans.