Buying Life Insurance can be an overwhelming process. We try to make it easy from start to finish.
What Is Term Life Insurance?
Term life insurance is designed to be simple. It has a clear and transparent value proposition – you pay to obtain coverage that can support your family, should you pass away during the term of your policy, and that is it. Terms can be 10, 15, 20, 25 or 30 years. The beauty of term life insurance is that it gives you one product that does one thing really well. It also provides invaluable peace of mind during the years when you most need to protect your people.
The cost of term life insurance can be 3-10x cheaper than other types of life insurance, such as whole life. That’s because you're only paying for the years that you need it. The monthly premiums are fixed so you don't have to worry about price increases either.
Your beneficiaries will only receive the payout if you pass away within the term. If you pass away after the term has ended, your beneficiaries will not receive a payout. Check out our article on term life insurance payouts if you'd like to learn more!
Many people may need less life insurance over time because their children will become financially independent, mortgages will get paid off, and they will retire on their savings, etc. So if someone wants coverage only for a specified period of time, term life may make more financial sense. With a term policy through The Term King, you don’t have to pay for more coverage than you need.
You are able to renew policies for a certain period of time after the original term has ended. The benefit of renewing the term is that your insurability is guaranteed but it usually comes with a higher monthly price.
How Much Life Insurance Do I Need?
Determining how much life insurance you need requires an examination of your current and future financial obligations, along with the resources your family could tap.
Your future obligations are a combination of what it would cost to help your surviving family members meet immediate and ongoing needs like funeral costs, taxes, food, clothing, utilities, mortgage payments, and your future obligations like college and retirement funding.
The resources that your surviving family members could draw on to meet those obligations include your spouse’s or partner’s income, savings and investments, other income producing assets, and any life insurance you might already own.
The difference between the two—your financial obligations minus the resources your family has to meet those obligations—is the approximate amount of additional life insurance you need. If this sounds confusing, you’re not alone. That’s why most people turn to a qualified insurance professional when they want to figure out how much insurance they need.
But if you don’t feel you’re ready to speak with an agent or want a preliminary sense of your needs before meeting with an agent, visit our Life Insurance Needs Calculator. It will walk you through the various questions you need to ask yourself and provide you with a rough estimate of how much life insurance you need to protect your family.
What Type of Policy Should I Buy, Term or Permanent?
It’s impossible to say, because the kind of coverage that’s right for you depends on your circumstances and financial goals. But, generally speaking, term offers the greatest coverage for the lowest initial premium and is a great solution for people with temporary needs or a limited budget. Permanent insurance may make more sense if you anticipate a need for lifelong protection, or if the option of accumulating tax-deferred cash values is attractive to you. Also, it doesn’t have to be one or the other. Often, a combination of term and permanent insurance is the right answer. You can also try our interactive Life Insurance Product Selector to help decide what’s best for you.
Does It Make Sense To Replace My Existing Policy?
Think twice before you do, because in many situations it may not be to your advantage. Before dropping any in-force policy, consider:
If your health status has changed over the years, you may no longer be insurable at standard rates.
Your present policy may have a lower premium rate than is required on a new policy of the same type, if only because you’re older.
If you replace one cash-value policy with another, the cash value of the new policy may be relatively small for several years and may never be as large as that of the original one.
You will be subject to a new contestability period.
You should ask insurance agents for a detailed listing of cost breakdowns of both policies, including premiums, cash-surrender value, and death benefits. Compare these along with the features offered by both policies. If you decide to surrender or reduce the value of the policy you now own and replace it with other insurance, be sure that:
The agent making the proposal puts it in writing.
You pass any required medical examination.
Your new policy is in force before you cancel the old one.