The death of a parent or other provider can be a crippling financial blow for any family. The surviving spouse and children could face debts, medical expenses, and they may struggle to replace the deceased’s lost income.
Life insurance is an effective strategy to manage this risk. However, some people avoid purchasing life insurance because they think it’s too expensive for their budget. In fact, according to a study from LIMRA in 2010, only 44 percent of American households had life insurance protection.
The good news is that life insurance can fit into nearly any budget. Term insurance is often an effective and affordable solution, especially if you want to minimize your premiums or if you only have a temporary insurance need.
What is Term Insurance?
Term insurance is a type of policy that provides protection for a limited period of time. The period of time, or term, is determined when you open the policy. Term policies often last for 10, 20, or even 30 years.
You pay regular premiums throughout the duration of the protection term. At the end of the term, both the premiums and the death benefit go away. Term insurance is essentially temporary protection with a temporary payment period.
Many term policies offer renewal and conversion options. With renewal, you can elect a new term at the end of your initial period. However, the premiums for the new term will be adjusted upward to reflect your advanced age.
Conversion allows you to change your term policy to a permanent policy, which lasts for the rest of your life. Again, though, the premiums will change to reflect your older age and the difference in protection.
Does Term Insurance Make Sense for You?
Term insurance is usually an effective solution if you’re looking for affordable protection or if you have a temporary need. It’s commonly used for the following needs:
Protection for minor children. Your greatest life insurance need may be when you have minor children in the home. They’re totally dependent on you for support, so your death could disrupt their entire standard of living. However, you may not have the same level of need when they grow up and move out of the house. Term insurance can be effective because it provides protection for the years in which your children are dependent on you.
Home buyers. Considering the purchase of a new home? If so, you may also want to purchase a term policy. Many mortgage lenders mandate that buyers have life insurance to cover the balance of any outstanding loan. You could buy a 30-year term policy to match up with your 30-year mortgage.
Business owners. If you own a business, it’s possible that your company could suffer after your death. You may have partners who would face financial obstacles. However, it’s also possible that you may not own the business for the rest of your life. You might want to consider a term policy to help you manage financial risk associated with your death.
In general, anyone who has a need for life insurance protection could be a good candidate for term insurance. At America’s Annuity, we can help you assess your need and develop a protection strategy. Let’s connect soon and start the conversation.