What is Term Life Insurance?

When you are wondering what is term life insurance you can come across a lot of information on the web. It might be a little bit confusing or even overwhelming which is why we created this website. We are here to give you all of the information you need and demystify your life insurance buying process. You can figure out what you need to get for coverage and then get a free quote right here. Just fill out the free form or call our toll free number to get a free quote and all the information you need to get covered and protect your family.

What is Term Life Insurance?

Term life insurance is a type of life insurance that lasts for a certain period of time. Another name for this type of coverage is “pure life insurance.” That’s because it mainly protects your family if you die before your time is up. This is designed for people who have families, who are the main breadwinners for the family. The terms start as low as five years but go up to as much as 30 years. This is the normal amount of time that people take to raise a family with multiple kids, so it makes a lot of sense. 

Tips for Buying Term Life Insurance

When you’re buying term life insurance you should consider what your family will need both in terms of the length of time and the amount of money. First of all, you need to be realistic about the amount of time you will need the coverage for. Don’t underestimate it just to save some money. It is better to overestimate it if anything. That way your family won’t be left without some kind of net when and if something happens to you.

The other thing to consider is that you will need to get the proper amount of financial coverage. Consider an amount that will not only replace your income but also help to provide for services that are needed when there aren’t two parents available. This could be things like a housekeeping service or child care. 

Other Types of Life Insurance

Besides term life insurance there are other types of insurance too. One type is Whole Term life insurance. This type of coverage is a permanent life insurance policy that will cover you for your whole entire life. It has an investment aspect to the policy that will turn into cash value over time. You don’t have to pay taxes on the accumulated value of the policy until you decide to cash out on it. It’s pretty cool because you can use that cash value to borrow against and that can help you with something like buying a house. With this type of policy your premiums stay the same for your whole entire life. That’s a pretty sweet deal.

What’s the Difference?

The thing that is the main difference between whole term and term life insurance is that whole term life insurance is a lot more expensive. For a whole term life insurance plan you can expect to pay on average at least a few thousand dollars more compared to a term life insurance plan. The other main difference is that a term life insurance plan is much more straightforward and does not accumulate cash value. 

What You Need to Know

The thing that you need to know about getting any type of life insurance is that you should get locked into a rate before you are age 35. If you get locked into a cheap rate in your 20s you can keep that rate for either the whole course of your term of the whole course of your life insurance policy if you have whole term. As you get older the rates go up even more steeply so make sure you get locked in when you can. This is a great idea in order to protect your family for years to come.

Who Should Get Term Life Insurance

When you want term life insurance, you only need to replace your income for a certain period of time. If you are on the younger side and plan to have a family you will be able to get covered for that period of time and that period only. It’s the perfect way to protect your family. You should also get term life insurance if you want the cheapest plans possible. That is definitely the case for this type of coverage! Keep in mind that you can almost always convert your term life insurance policy to a permanent one if that’s what you truly want in the end, but you just can’t afford it right now.

Who Should Get Whole Term Life Insurance

When you want to get whole term life insurance, you should be OK with paying more for your insurance policy. It is particularly great for parents who have a special needs child who will always need a certain level of care throughout their whole lives. That means their dependence on you won’t end when they become an adult, so you should get them covered forever with a whole term policy. This type of coverage also might be necessary for people who want to save for retirement for their own fun, and then use a life insurance policy to give something back to their families. It can also be helpful to make for an equal inheritance. If you plan to give one child a house or other valuable property, you can use a whole term life insurance policy to give an equal inheritance for your other child or children.

How Much Do You Need?

There are three basic ways to calculate how much you will need for term life insurance. First of all you can multiply your current income by 10. So, if you make $50k per year, you would want to get a $500,000 policy. This should give your family enough income for 10 years of your absence and it will make sure that they will have enough time to go into a transition and figure things out. Another idea is to do the same thing, but then add $100k per child to help pay for college. So, if you make $50k per year and have 2 kids, you would want to get a $700,000 policy. If you are a family that really values sending kids to college this is an essential idea. Finally, another method is called the DIME method. In this method, you take the estimated cost of your debt and final expenses, income, mortgage and education. Final expenses include anything you would want for your funeral which can become quite pricey. Income would be your income for whatever period of time your family would need that from you. It’s a more complex method but it can give a more accurate result of what you actually need. 

How to Plan

Don’t plan your life insurance plan all by yourself. You need to plan it with your family because it is something that everyone should know about. If you think of it as just another part of planning for your financial future you can feel less stressed about it. The worst thing you can do is keep your life insurance plan a secret from your family because that means your family won’t even know that they have your support in case something happens. You can even work with a financial planner or life insurance specialist to make the decision even easier.

Also, you probably want to get a slightly higher number than what you are thinking because you have to take into account cost of living increases and other unexpected expenses. You should also pick a 30 year plan versus a 20 year plan if you plan on sending your kids to college. That’s because you never know how long it is going to take them to get on their feet once they are out of college.

You can also buy smaller multiple policies to cover different aspects of your life. You can get a smaller whole term policy to cover your spouse and kids for their whole lives, and then you can get a supplemental term life insurance policy for some extra coverage when you get into the part of your life when your kids are still young.

Now you know what is term life insurance!