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Understanding Term Life Insurance

What if something terrible were to happen to you today?

  •  What if you couldn’t be around forever for the people that you love?
  • What if there were things you needed to take care of but you couldn’t be around always?

These are really important questions that need answering when you come into your own. Young single adults, young parents and middle-aged families that have realized the need to plan and prepare for contingencies are probably ignoring a huge part of planning for their futures: life insurance.

Saving up for a home of your own, an emergency fund, kids’ college, and retirement are all important. They are keys to a future that you can plan for that can be less uncertainty-filled. Planning requires goals setting exercises, sacrifice for future benefits and the patience to wait and watch in the ups and downs of the stock market, job uncertainties and other unpredictable events. But what about planning for contingencies like death? Not a very pretty topic, yes, but the truth is, all these other plans can go in the trash if you’re not around. Life insurance can be a saver in this case. By planning for times in your absence, you can rest assured that your loved ones will be taken care of if you’re not around.

Even though I would typically advise people to take more interest in financial products before buying them (and not listening to advice from others who may have a vested interest in their purchases), I can say this much term life insurance is a simple, easy-to-understand life insurance tool that can work great for young families and individuals on shoe-string budgets hoping to be insured despite their circumstances. So when you’re in doubt and you need to be covered quickly under a life insurance policy, go with term life insurance.

So what is term life insurance?

It is life insurance that covers individuals the same way as auto insurance or home insurance would. You pay a premium every year for a certain amount of coverage, and a death benefit is paid to the family members (who are listed as beneficiaries on the policy) if you die while the policy is in effect. If you do happen to outlive the policy, it is no longer valid in coverage. This means that the insurance company is no longer bound to pay a death benefit to your beneficiaries if you die after the period of coverage ends.
Term life insurance is the most affordable form of independently owned life insurance currently available. Sometimes, group life insurance coverage can be cheaper than a term life policy but remember that it is dependent on the terms and conditions granted to the group, most importantly on the fact that you ought to be “in the group”. Group life policies are most often policies offered at work, so this means that you have to be employed to be covered under group life. If you lose your job, quit or get fired, the coverage is no longer valid. This is why many advise getting term life insurance at the very least, because being covered independently is preferred than being covered under group life (there are some instances when group life offers the upper hand, but that is for another day). Before you buy a policy though, you need to calculate how much you will need, and you can do that easily with the help of life insurance needs calculators available online.

Getting quotes online:

Since term life is so easy to comprehend and is so affordable, it is sold online on aggregator websites. Aggregator websites have quotes engines that grant access to free term life insurance quotes. All you have to do is fill out basic information about yourself, and the quote generator will throw comparisons for up to 5 life insurance carriers across the country for the same amount of coverage both in years and policy face value. Comparing quotes is a very important step; it gives you a broader picture of what’s available out there, and having a range of prices to choose from can help you make better informed decisions. Once you choose the term policy that is right for you, buying it is also an easy process because the application is available online. All you would have to do is appear for a medical examination (the life insurance company will direct you to the appropriate healthcare center to complete this process) in order to be underwritten for the policy.

Before I finish, let me share information about other options in life insurance. Permanent life insurance is a cousin to term life insurance, and is usually bought by those with the need for permanent death benefit. While permanent life policies are more expensive, they are often a good investment for those who need life insurance money around long after retirement, or those who are looking for a way to supplement their savings. You’ll have to spend some time researching the pros and cons of permanent life though. But when in doubt, or when you have a great paucity of time or are confused, go with term life insurance and invest the difference.

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