I get the question all the time from our clients. What is the right type of life insurance for me to buy? I always tell them the kind that is in force the day that you die. Tough part is who knows when that will be? In my time in this business I don't think I have ever had a beneficiary ask me what kind of life insurance did Mom or Dad have or did it have a cash value associated with it. All they want to know is how much is the death benefit for? We sell lots of term insurance in our office and I feel it plays a vital role in most people's financial plan. Here is how it can be useful.
Term insurance is cheap. You can buy large amounts of death benefits and pay very little premium especially if you are healthy. In fact, most term policies we sell costs less than a cup of coffee a day in premium.
Term insurance is temporary. You can buy term insurance for periods of time like getting your kids through college or the time it take you to pay off your mortgage or other debts. You have the ability to lock in premiums for set amount of time giving your family the protection they need if you were to die pre-maturely.
Term insurance is convertible. You can convert your term insurance to permanent insurance in the event you become uninsurable. This is true for most carriers, but not all of them so make sure you are asking that question when purchasing your coverage.
Term insurance comes with extra benefits. A new addition to the term insurance market is what they call living benefits. These benefits may allow for proceeds to be paid to the insured if they are still living, but have a terminal, chronic, or critical illness. Make sure to ask if your term policy has living benefits associated with it.
There are lots of good uses for term insurance and it can be useful tool for families, but it does not solve all your insurance needs. There is also lots of reasons to look at permanent type insurance policies as well which we will cover in a future article. Make sure you are asking about the benefits provided above when looking at making your purchase.