How To Choose The Best Term Life Insurance For Yourself

Mortgage Protection – Do you have a mortgage? If you do, the last thing you want for your loved partner or your  family is to be homeless when you are die unexpectedly. So a decreasing term life insurance policy can be used to pay of your existing mortgage. The approach is to select a term that matched the tenure of your mortgage payment. When you choose a decreasing term, the death benefit keeps on reducing with your mortgage balance. This is one very important and specific reason to choose the best term life insurance for your need. To get the best quote on cheap term life insurance use our zip submit engine above.


Future Financial Security and Income Replacement – The most obvious and compelling reason which re iterates the saying “Life insurance is sold, not bought”. Being financially responsible of the well-being of your loved ones calls for a lot of future planning. If you earn as a couple then some of the money which you earn goes into savings and other financial obligations which you might have each month. In a scenario, where one of you passed away unexpectedly, the income will reduce and thus impacting your financial workflow. How are you going to replace that loss of income? Through a term life insurance this can be for 10, 15, 20 or even 30 years as per your desired tenure.

Funding Burial Costs and Final Expense – A critical part of retirement planning is to take care of every aspect of your retired life and any expenses which may arise after you leave for heavenly abode. Once such expense is your burial cost and final expense. I have covered this in great detail in this article. So again there is a need of life insurance in this specific situation.

Educational Expenses – Now this may only apply in a case where you have children going to school. Life insurance proceeds (death benefits) may be utilized to fund college education. If you die, the death benefit is invested to grow substantially and when your children are ready to go to college, they will have funds ready to pay for college fees and other tuition fees. So, yet again there is a need of life insurance here.

Now, to choose the best term life insurance begins by analyzing your need to buy life insurance. Hence I listed the most common reasons which make a life insurance policy a good financial obligation. Each one of the reasons mentioned above have their own tenure which can coincide with the tenure of the term which you would like to choose. There are many term life insurance companies offering quotes which match your objective. Now let us understand, what is term life insurance?

Concept Of Term Life Insurance For An Average Joe

When you buy a term life insurance, you are buying financial protection for a specific time period (term). The tenure of the term is determined by the financial obligation which you are fulfilling like mortgage or if you want to protect your income which feeds your family. If you need is temporary which will only last between 5 to 30 years then term life insurance is the way to go. Difference between term and whole life insurance is covered here.


How Much Coverage Is Enough While Choosing

The Best Term Life Insurance

The death benefit which you choose is the amount your beneficiary gets if you die within the specified period. How much death benefit is required is again driven by the need to buy term life insurance. See reasons above. Many financial advisors come up with the theory of buying a policy with a limit 10 times your annual income. This vague statement is far from truth. The death benefit should depend on individual specific financial needs. People with bigger families including children and running a mortgage need a higher limit while someone living alone would only need cover for final expense. If someone has an earning spouse then he may decide to lower his coverage. If your retirement planning is in a mess with not enough savings then increasing your death benefit is a wiser choice. If you are a part of group life insurance plans available through your employer then again lowering your death benefit is ok. So, it all depends on your specific circumstances. A lot people ask whether $1 million is enough. I explored this topic in this article. Also, if your family is likely to face a major financial risk which is beyond your life then buying a whole life insurance will make sense here. One such situation is estate tax liabilities.


Choosing The Right Term For Your Life Insurance Policy

One of the main deciding factors to determine the tenure of your life insurance protection is your age. Someone who is young, married and in his early 30’s may opt for a 30 year term plan while a 20 year term plan may suit an individual who is in 40’s or 50’s and nearing his retirement age. Your age is also important when you compare insurance quotes from different companies. The older you are, higher will be the premiums. Buying the right amount of coverage when you are you young and healthy is the right move. Your financial commitments will change at every stage in life; hence it is important that even after purchasing a term life insurance plan, you review your needs from time to time. Even with your existing plan, the tenure can be altered whenever you wish to.


Different Term Life Insurance Options For You

Group Term Life Insurance – These term life insurance plans are the most common type of plans offered by an employer. These policies, as the name suggests is offered to a group of people who are part of an organization and the benefits remain the same for all. These do not cater to your specific needs. Generally they are offered for free but if at all you need to pay the premium cost will be at a discounted rate. The main benefit is you do not have to go for a medical examination to get approved. Please note that if you are a part of group life insurance plan, do not think that the coverage is enough. It is more life a supplemental coverage. The payout generally is not sufficient to meet your requirements.

Renewable Term Life Insurance – Renewable term life insurance will suit individuals who might feel the need of extending the term of their policy beyond the term. One example could be as follows:

An ailing family member who may need extra medical attention in later stage of life or a child with special needs.  Such policies can again be renewed for specific number of years without going for a medical checkup.

Convertible Term Life Insurance – As we discussed earlier that our needs change at every stage in life and hence our financial situation. This leads to the existence of convertible term life insurance policies. You may start off with a simple term plan, but later feel the need to switch to permanent life insurance. The switch needs to be done within the specific time frame from the date of issuance of your term plan. No medical examination is required.

Second To Die Life Insurance – I have covered the concept, benefits, and the need to have second to die insurance with example in this article.

Increasing & Decreasing Term Life Insurance – Decreasing term life insurance is covered in the article which is referenced above in the first paragraph.  The basic principle is that your premium payments remain the same while the death benefit keeps increasing or decreasing with tenure.

Annual Renewable Term Life Insurance – This is covered in this article for your reference. This is basically for short term needs.


Mistakes People Make While Choosing A Term Life Insurance Plan

This list is just the reiteration of avoiding any mistakes while you choose the best term insurance:

  1. Choosing the wrong term or insufficient coverage amount.
  2. Not reviewing your policy needs on a periodic basis.
  3. Not considering additional expenses which you might come across in the future.
  4. Assuming that people with health issues cannot get life insurance.
  5. Delaying in buying a life insurance policy when you are young, and
  6. Thinking, you do not need life insurance if you are single. Yes, you do!

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