Is Term Insurance Right for You?

When searching for life insurance, the consumer is faced with hundreds of different choices. The choices can be overwhelming, especially for someone who has not had any insurance experience. The jargon can be enough to make someone put the idea aside and remain uninsured. But it doesn’t have to be too difficult; if you narrow down the choices based on your needs you’ll see that most likely term insurance will suffice.

Term insurance is designed to provide coverage for a set amount of time: a “term.” This term can be a certain age, or a certain number of years. After the term is over, the coverage usually ends. The product is designed to cover the life of the insured through the time when the insurance is needed the most, namely during the years when he or she is earning an income, has a mortgage to pay, and possibly has children living in the home. This is the time when most is at risk if the insured would happen to die. Many term policies end coverage at age 70 or age 80, since at this point the insurance companies feel the insured is not earning an income and is not caring for any dependents.

Term insurance is very popular because you can play with the coverage periods (some companies allow you to define the number of years, from anywhere from 1 to 40 years of guaranteed coverage, as long as you pay the premiums). Term insurance is also very cheap as long as you are relatively young and healthy. So a young couple with children can get a large amount of protection for a low monthly premium.

Term insurance is most popular with people who don’t have a permanent need, as described above. However, it is also popular with people who simply can’t afford permanent insurance. There are many benefits to permanent, or whole life, insurance, but many people simply can’t afford the higher premiums. Term insurance is also popular as a work related benefit.

There are many sites online that sell term insurance. Some will compare a host of companies’ rates and let you pick the one you think is the best deal. Basically, these sites are acting as a broker for you. You could visit a broker in real life and get the same deal (the websites are earning the commission in this case rather than the broker). Brokers are great because they can shop a lot of different companies and help you determine which coverage and the amount of coverage you may need.

If you are fond of one particular company, you might want to visit an insurance agent. An agent generally represents just one company. They work closely with that company, and often have a little more pull in getting a policy issued, especially if you’ve been declined before due to health problems.

Whichever way you choose to purchase your term life insurance, be aware that not all companies are created equal. Some may offer you an enticing cheap rate now, but will hike the rates in the coming years. Do some research and make sure you’re choosing a financially strong, reputable company.

Finally, there are some reasons not to choose term insurance. Whole life insurance plans generally offer the insurance until the insured dies (as long as premiums are paid) regardless of when that happens. These plans generally include a built in savings policy that can be tapped at any time, or if the insured decides they no longer need the death benefit, they can cash out the policy. There are different schools of thought on permanent insurance, and many will say they are not worth the extra premium. However, most people should at least have some permanent insurance, even if it’s just a small portion, to pay final expenses if they die after term coverage has ended.

————————-

This article was created at http://adviceonhowtomakemoney.com. If you enjoyed reading the article, feel free to read more at the homepage. If this article is not being read on that site, then it has been stolen.

Posted in Insurance