Life insurance allows you to leave money for loved ones when you die. It can be used to pass on an inheritance tax-free, replace your income, cover your end-of-life expenses, and more.
About half of Americans report having life insurance, according to the 2022 Insurance Barometer Study conducted by LIMRA and Life Happens. There are many different types of life insurance on the market, but when it’s apolitics is the best option? Read on for five common scenarios where term life insurance can make sense.
If you’re in the market for life insurance, start by getting a free quote so you know exactly what to expect.
Before you decide if term life insurance is right for you, it’s helpful to understand exactly what this type of policy is.
What is term life insurance?
Term life insurance is aIt offers a fixed amount of coverage for a set period, such as 10, 20, or 30 years. When your policy expires, you usually have to go through the underwriting process again if you want to renew your coverage. Unlike, the insurance can cover you for the rest of your life at a fixed rate. Whole life insurance policies also come with an attractive that can potentially be accessed . Because of this, and because of the length of whole life insurance policies, they tend to be more expensive than term.
Who can benefit from term life insurance?
Term coverage can make sense in a variety of situations; particularly when people are on a budget and need affordable coverage. Here are five groups that would likely benefit from taking out a term life policy, according to industry experts.
Term life insurance often makes sense forwho are earlier in their careers, on tighter budgets, and starting families.
“It’s generally best for … young adults who want to make sure their family is covered in the event of an untimely death,” said Adam M. Hyers, licensed insurance agent and founder of Hyers and Associates.
And he adds: “The idea is that the need for insurance will be much less once the term has expired. The children are older, they do not go to school and they are alone. The houses are paid for and the savings / investments have increased.”
If you think you could benefit from term life insurance, start by getting a free quote now.
Spouses with significant shared debt
If you and your spouse have incurred a significant amount of debt, term life insurance can offer affordable protection while you have large outstanding balances. “It’s often good practice to make sure that any debt — car loans, credit card debt, private student loans, a mortgage — can be paid off if necessary to prevent the surviving spouse from finding themselves in financial trouble,” she explains. Danny Cieniewicz, CFP at Hyperion Financial.
Seniors who want to leave an inheritance
Term insurance can also come in handy if you’re getting older and don’t have an inheritance to leave at your own discretion.. “I’ve been seeing an increasing number of seniors who didn’t plan to buy term life for retirement due to low costs. They hope they can put the term insurance benefit behind them for their loved ones,” Natasha said. Mcpherson, CLTC, financial advisor to Hall Wealth Management.
Business owners may also find a need for term life insurance. “Banks often require key person life insurance for organizations borrowing. This protects the bank, ensuring that your business can repay the loan even if there is a death of a valued employee,” says Chuck Politi, owner of Political Insurance Agency.
Mike Raines, owner of Raines Insurance Group, adds: “Business owners may also need large amounts of life insurance to make sure the business can continue if something happens to one of the partners. Term life insurance is fits this bill nicely by providing an immediate death benefit exactly at the time it is needed.”
People who want to stratify insurance policies
Finally, term insurance can act as ato help you save on your overall coverage costs. Daniel Adams, MBA, CFP, President of CEG Life Insurance Services, explains: “Term life insurance can be beneficial for people who purchase a smaller amount of permanent life insurance for lifetime protection, but need to supplement that amount for a limited time while your permanent life insurance policy benefit grows.”
Is Term Life Insurance Right For You?
Term insurance can be a good solution in a variety of circumstances, like these five, but it has advantages and disadvantages. Although the cost is lower, the coverage is not permanent and the policies do not come with a cash value component. If you have any questions or concerns, be sure to consult with a trusted insurance agent or financial planner. You can also get a free price quote now or use the table below to compare some of the top life insurance providers.