For young families learning about personal finances, life insurance planning should be at the forefront. It offers the protection you and your family need most, and it does so at a great price. It pays to go with an independent insurance agent or to search online, in order the most attractive term life insurance rates. Since there is no tie to any one specific insurance company, they can compare a number of insurance companies to find you the best rate.
Term life insurance, as the name implies is insurance that protects an individuals life for a specific period of time, or term. When compared to its traditional whole life counterpart, term protection can be purchased for fractions of what it would cost to fund a permanent insurance policy. Whole life insurance, or permanent insurance, is often more expensive than term because it is not sad for a specific term, and lasts as long as the policy is enforced. Permanent life insurance certainly has its benefits, but when it comes to buying life insurance to protect your family at a substantial discount there is no beating term.
Term life insurance premiums are determined by a number of things. For obvious reasons, your health and your age are major factors in determining your insurability. The farther you go out in years, also plays a role in the insurance costs. If youre a relatively healthy 25-year-old, and just need a life insurance for a period of 10 years, term coverage is very inexpensive. If youre a 55 years old, and want a policy that will ensure you for another 20 years, the costs will be more expensive, but still reasonable when compared to whole life. Regardless of your specific situation, term is often the answer, should you need insurance for a specific period.
One of the biggest objections that we hear in the insurance industry is that term premiums are often wasted. The reason being, most individuals feel like they will outlive their 20 or 30 year policies. And many of them will, so they want an alternative. The downside to term lcoverage is that when the term is over the insurance policy expires worthless. To answer this objection, the insurance industry has introduced a new product called return of premium life insurance. This product commonly comes in the form of a rider, which insurers that if you dont die youll receive all your premiums back at the end your policy. This win-win situation comes at a cost, however, many return of premium policies can add 60%, to premium costs. For some, the protection of family and premium dollars, if youre fortunate enough to live are worth the extra cost. Most of the time we recommend a straight term policy, for those looking for the lowest cost.
Depending on your needs, term coverage can be purchased so that it is in force as long as you need it. This type of insurance is commonly purchased for guaranteed periods of 10, 20, or 30 year terms. This provides for much flexibility. You may want to have insurance in place for at least 30 years, ensuring that your kids are grown and out of the house before expiration. You may want to provide income for a surviving spouse, should something happen to you. Term provides that flexibility, and does so on the cheap.
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