Term Life Insurance

Term Life Insurance

Life insurance is among the many financial arrangements individuals are often advised to make to provide security for their families. A life insurance policy can provide money for funeral expenses, care of dependents, for college costs or for mortgages. Term life insurance is often the most affordable way to provide a payment to beneficiaries in the event of the insured person’s death.

What Does Term Life Insurance Provide?

Term life insurance is given this name because the policy is in effect for a given period of time, or “term.” During this period, the holder of the policy pays a set amount of premium for a pre-determined payout amount. If the holder of the policy dies within that period, the beneficiaries are paid the amount of money. Term insurance is distinguished from permanent or “whole” life insurance in that is only in effect for the term of the policy.

Who Should Buy Term Life Insurance?

Life insurance can provide a cushion against loss of earnings and can provide additional security in a number of circumstances:

· People who still have children living at home can benefit from term life insurance that will provide income for the household to prevent disruptions in their living standards.
· People who wish to have the mortgage paid so a spouse can continue living in the home.

· People who have significant consumer or other debt that would be a burden for survivors.

· People who are concerned about paying for educational costs if prime earner dies before children are college age.

Why Is Term Insurance Often The Best Option?

Term life insurance covers a specific period of time, generally, 10, 20 or 30 years. As with all insurance, the price of the policy is determined by actuarial tables that calculate the odds of death within this period. This calculation usually favors the policyholder, so the price is more affordable than permanent insurance, which stays in effect for the life of the policyholder. Term insurance can cost up to 1/10 of the price of permanent insurance.