The Basics of Life Insurance
There’s no need to feel unsure about what happens once you’re gone.
It might be taboo to talk about death, but eventually everyone must deal with it. And dying is expensive; between healthcare costs, funeral costs, and paying off pre-existing debt, there are a lot of things those you leave behind must take care of. That’s why you have the opportunity to help them even after you’re gone with life insurance. If you’re looking for an option to help your loved ones but don’t want to pay for life insurance for the entire duration of your life, then term life insurance might be the right option for you.
How does term life insurance work?
Life insurance works in a similar way to home or vehicle insurance. You pay your premium every month, and in the event of your death, your beneficiaries receive a payout. This can be used for the expenses of your death, and the amount is usually non-taxable. Most insurers will require a medical exam, as well as information about your health and lifestyle choices.
With term life insurance specifically, you choose the duration of your policy, typically anywhere from 10-30 years. After the term is over, you are no longer insured. However, you usually have the opportunity to renew your insurance policy.
What kinds of term life insurance are there?
Level-premium or level term policies allow you to pick your specific period to be insured for. Your premium and the benefit that is paid out remains fixed throughout the duration of your insurance policy.
Yearly renewable term (YRT) policies do not have a specific term, but your premium and payout are reevaluated each year. As you age and your health changes, your premium will reflect your risk.
Decreasing term policies also have a set period of time, but as your policy goes on the payout decreased. Your premium, however, stays the same.
Why would I want term life insurance over permanent life insurance?
There is no one-size-fits-all for life insurance, but term life insurance has specific benefits. Unlike permanent life insurance, which protects you for the rest of your life, term life insurance gives you flexibility. You don’t have to be locked into one premium or amount of coverage for the rest of your life. Plus, term life insurance will normally cover you for more, at the expense of higher premiums.
One thing to keep in mind is that your insurance provider may not allow you to renew your life insurance once its duration is up. This can be for any number of reasons, both financial and medical. With a permanent life insurance policy, you’re covered as long as you’re paying your premium.
When should I get life insurance?
Just because you’re young or early in your career doesn’t mean you shouldn’t start insuring yourself. Getting insured early is often a smart financial decision. Ultimately, your policy is paid out to help your loved ones take care of your finances after your gone, primarily your debt. No matter what stage of life you’re at, you’re probably going to have debt, and having a plan set up to cushion those who you leave behind can give you some peace of mind. Plus, if you lock in a premium on a long-term loan while you’re young, you can continue to pay that lower premium as you age and your health declines.
No matter what stage of life you’re at, it’s important to protect not only yourself but those you love. If you’re not already insured, you can get a quote in minutes and start protecting yourself as soon as possible.