Upon death, the average American adult leaves behind $62,000 in debt on average. While some creditors cancel debts upon the debtor’s death, others go after the deceased’s estate. That’s why life insurance is important. This policy pays death benefits to the named beneficiaries. The benefits can help in clearing debts, paying funeral costs, paying bills, and sustaining the policyholder’s family. Since whole-life insurance is somewhat costly, term life insurance becomes the next best option for a policyholder looking to shield his/her loved ones financially posthumously. Here’s a detailed guide to term life insurance.
What Is Term Life Insurance Coverage?
This refers to a life insurance policy that spans a specific number of years, say fifteen or twenty. It only provides coverage during this term, after which it expires. In case you die during your policy term, the insurance company will pay death benefits to your dependents. If the policy expires while you’re alive, you will not receive a payout, a point at which you may want to renew the coverage. Remember, the cost of premiums depends on factors such as your health status, age, and coverage size. Premiums can either increase every year or remain constant depending on the type of term life insurance policy you have.
Advantages of Term Life Insurance
The two major advantages of term life insurance include the following:
- Affordable –Term life insurance is generally more affordable than whole life insurance. This policy only provides coverage for a specified number of years, unlike a whole-life policy which will only expire once the policyholder dies.
- Flexible – If you only want short-term coverage, term life insurance is a good option. It allows you to choose the years you want to be covered. This way, you can cover short-term financial needs.
Factors to Consider When Purchasing Term Life Insurance
- Future financial needs – It is possible to predict your future financial needs. For instance, having a child means you will have to cater to their college fees at some point. You can purchase term life insurance coverage directly to pay your dependents’ college fees.
- Your age – Insurance companies typically charge higher premiums on life insurance policies for older policyholders. You are more insurable at a young age, so you should consider term life insurance before you grow old.
- Your health status – You are more likely to get insured if you are healthy. Anyone with lifestyle diseases such as diabetes and hypertension may have it rough finding affordable life insurance, particularly because insurers will term them high-risk. Hence, being in good health means that it’s the right time for you to get term life insurance.
- Insurance provider – The cost of insurance varies across insurance providers. Remembering this, you need to shop around before settling for the best insurance coverage. This will greatly save you money and increase your chances of getting suitable coverage.
Don’t Know How to Get the Right Term Life Insurance Plan? Consult CAV Insurance Agency
For anyone that cannot afford whole life insurance, term life insurance is a great alternative. Not sure how to get started? Talk to the life insurance experts at CAV Insurance Agency. We have the knowledge and expertise to help create the right policies for each individual. Contact us today to learn how life insurance can help you.