Term Life Insurance Lowdown

Make Money with Term Life

-- Pushpa Sathish, Staff Writer

Term life is more affordable than all other forms of insurance – we all know that. People choose to go with a term life when they need protection for a certain period of time, when kids are in school or when you’re newly married and need insurance to tide you through tough times. Term life does not offer you a return on your investment, your money is not returned at the end of the term.

But here’s how you can actually make some money by investing in a term life policy – pay the low premiums and invest the rest of the amount (that you would have spent on a whole life premium). Insurance companies are conservative investors, so a whole life will probably return you less than your own investment.

Who Needs Term Life Insurance?

-- By Pushpa Sathish, Staff Writer

Term life insurance may not be the most sensible insurance option, especially for those who are looking at insurance as an investment. But there are situations where term life will work out better than whole life insurance policies which carry a much higher premium.

• Young couples who have a considerable amount of debt, and who absolutely need insurance, will find a term life insurance policy with a large benefit within their means, and able to meet their needs.
• Families that need insurance cover for a short period, under ten years or so, can opt for term life options. In this period, children live at home, and their needs have to be met. Once the fledglings leave the nest, the financial cushion can be reduced. Term life insurance policies offer the best short-term financial advantages.
• Couples approaching retirement with college-going kids and a mortgage will also find term life insurance policies that cover both attractive.

The best part of short-term term life insurance options is that these policies are convertible to whole life on cancellation. So once the family finances are doing reasonably well, and the household and academic expenses are considerably reduced, you can change your policy to the whole life option. But make sure such a conversion is possible when you first take out the term life policy.

Terms of a Term Life

When taking out a term life policy, there are a few issues that need to be considered before you decide on the length of the term.

• Take stock of your outstanding debts and loans, and work out how much money your dependents will need to pay them off in the event of your death.
• Consider the number of years your children or dependents will take to become financially self-sufficient.
• Look at your financial needs and those of your dependents.
• And last, but certainly not the least, decide on your policy only after you have checked out various options.

Term Life Insurance or Whole Life insurance: What do I buy?

Life insurance is something every wise man or woman goes in for. It protects the interests of the individual and his or her family in more ways than one. However it is important to adequately but not over insure oneself. A lot of thought has to be put in before the decision of which life insurance should be taken. Different objectives can be met with different types of life insurances. More often than not, people are confused between term life insurance and whole life insurance and hence are not able to decide between the two. Remember, that term life insurance is temporary and hence provides coverage for a specific time period like 10, 20 or even 30 years. The policy pays off only if you die with in the policy period.

Whole life insurance on the other hand is designed to stay in effect till death occurs. It has to pay off one day. Premium for both stays the same through out the years for which the policy would be in effect. There is however a savings component built in to whole life insurance. Therefore the value of whole life insurance actually increases in value the longer you own them and hence are sometimes referred to as cash-value policies. You may actually be allowed to borrow from your policy if the policy terms state so. Read more on this on The Charlotte Observer.

Term life insurance ideal for young-children families

Term life insurance is considered mostly ideal for couples in their thirties. These families have small children and their financial needs fluctuate all the time. Hence, such families are going to benefit most from term life insurance. Typical young-children families don't usually have cash to spare and have umpteen bills to pay. So they are unlikely to have cash for a whole life policy.

The whole life or the permanent life policy will pay the amount insured at the time of death. But young families have breadwinners who are usually robust and the chance of them dying is much lesser than a couple in their sixties. However, even these healthy young couples need insurance in case the breadwinner dies leaving his dependants destitute.

Term life policy is the answer to this group of people. The premiums are much lower and affordable and for the specified period of time there is a sense of security for the insured.  If the main breadwinner were to die the amount insured is paid to the family and this money in such a situation will be exactly what the dependants need.

The biggest advantage being the fact that term life insurance can provide fairly large amounts of coverage with relatively low premiums. Others take out a term life policy to cover some long-term payment like a 30-year mortgage for example. Again this is a way for dependants to keep up the mortgage payments in the event of death of the breadwinner.

You can purchase term life coverage for 1, 5, 10, or 20 years. However, it works best for covering defined costs in the case of death, such as to pay off short-term loans. So if you are a parent of young children and can't really afford a permanent life insurance it will be a huge advantage to you if you take out a 20-year term life insurance. By the end of twenty years your kids would have moved out and you'd be sitting pretty knowing you did well - all thanks to the security provided by your term policy.

Think Before Buying A Policy

You need to consider several things before deciding to buy a term life policy. Since, the policy is available for a certain period of time only, so you need to be very sure about the fact that this is what you want before actually getting it. This is an important point as this time period may usually refer to throughout you kids childhood or your stay in a nursing home, or things like that. When you decide to buy a term life insurance policy, consider how your policy will affect your family members. Your insurance policy needs to be considered by your family members if your concern is to save them financially.  This can make the process a lot smoother and easier.

Once deciding upon all the above factors, you can contact your insurance agent and ask him all the relevant questions before making a final decision. Asking your agent all the important questions will help you get exactly what you want. It’s simply not advisable to just pick any policy which appears good to you.

Term Life Insurance: Tips to Save Money

1. Buy yourself a policy early in age. At young age your financial requirements are minimal. So, it’s a good idea to start early when your health as well as policy rates both are good. This way you can provide financial protection to the beneficiaries as early as possible.
   
2. Its best to buy a policy before you have any kind of major health risk. Healthy people have the best mortality risks and thus are much cheaper for companies to insure. Thus such customers are offered lower rates in comparison to those who have any kind of health concern such as diabetes, heart problem, or any other high risk factor.
   
3. It’s a good idea to purchase an amount of coverage equal to 6-10 times your annual. Agents might try to sell you more coverage than what you really need, but its advisable not to take anything above the requirement.
   
4. You can save money by checking out the various options of payment on which the insurance company gives discounts. For example, many insurance companies give discounts to those customers who pay their premiums annually, or who pay monthly by electronic funds transfer (EFT).
   
5. It is a wise decision to invest in a term life insurance, as it is more affordable and cost-effective in comparison to whole life insurance.
   
6. Purchasing a life insurance policy through your employer is very convenient. But, it might not be the best deal available to you in the market. At work place, the policies available are often based on a combined profile of the employees. These type of policies expire when you leave the company. Thus, inexpensive policies that cover up your dependents are a better alternative.
   
7. At specific coverage prices such as $250,000, companies often offer price breaks. Many people can actually pay less for more coverage. It’s a good idea to keep a check on how little your prices increase when you increase your coverage.

Tips To Buy A Term Life Insurance Policy

• It is a good idea to buy sufficient life insurance policies to meet all your needs especially when term life insurance policies are so affordable and flexible.
• It always pays to decide that term which suits your needs. You can choose the time period taking into consideration the dependents.
• It makes perfect sense to decide and buy a policy as early as possible rather than waiting to grow old. When you get into your 50s and 60s, it may become more difficult to find an affordable policy.
• Make sure that to mention all your health risks in your application. Life insurance companies investigate before paying and if any information submitted by you is found incomplete or false, your beneficiaries might not get the amount.
• It is advisable to check out the billing or the payment options offered by the insurance company. Many companies offer discounts to the customers who pay their premiums annually or monthly by economic funds transfer.
• Many companies often offer “price breaks” at certain coverage amounts (e.g., $250,000 vs. $225,000). People can actually pay less money for more coverage. You can keep a check on how little your prices increase when you increase coverage to $250,000, $500,000, or $1,000,000.

Choosing a Term Life Insurance Policy

Well choosing term life insurance or for that matter any type of insurance has to be a careful exercise. Any decision taken in haste could adversely impact your risk cover. To start with, price is one important consideration. Price quotes for term life insurance offered on the internet will provide a competitive benchmark.

For procuring a term life insurance policy, the main considerations include benefits of the policy and how they fall in line with the expectations and the need of the potential policy holder. Further, it is imperative to consider the final expenses that might be associated with a terminal illness. A term life insurance as a product should include long term financial security for your nominees in the event of death.

While seeking out term life insurance, it’s important to review one's financial situation. Having a long-term horizon is necessary when seeking term insurance prices, as it helps to derive maximum value from the deal. So, just as a generic tip, it is important to understand that there is no kitchen sink solution available to insurance needs. Each one’s situation is unique and should be carefully considered through an insurance agent to zero in on an ideal policy made just for you.

Choose an Agent well

Once you have decided to opt for a Term life insurance, you need to carefully choose an insurance agent. In fact, this is true for any type of insurance product that you may want to buy. Most of the life insurance companies offer the products through agents, rather than having a directly sales channel with the masses. While some companies have "captive" agents, who only represent one company, most of the competitive term life insurance providers opt for independent agents.

Independent agents are those who are free to offer insurance products of different companies. It is always preferable to choose an independent agent. This gives you the option of opting for a term life insurance product that best suits your need. Such an agent would be able to offer you a wide array of products across providers. However, it is always advisable to first obtain an online life insurance quote, and then select an independent agent. An informed customer always benefits.

Advantage of opting for Term Life Insurance

Parents are responsible for the children’s financial well-being. They are aware of their responsibilities and try to provide the best possible education facilities and other comforts to their children. However, sometimes due to the tight income, they incur debts by purchasing home appliances and other items. Term Life Insurance will be a better option for such parents due to the low premium rate and long coverage period.

Term Life Insurance replaces one’s income and services to the dependants. It also pays off the debts and offers a peace of mind. It buys time to raise children to financial independence. Eventually, children grow up and leave home and debts get paid down. borderlandnews.com reports:

Term is like auto, homeowners and health insurance because it pays only if the "bad thing" happens. Years of coverage range from as little as one year, to level coverage and premiums for as long as 35 years, with options to renew coverage up to age 100.

Read More: If money is tight, term insurance may be best

Benefits of Term Life Insurance

Term Life Insurance is seen as beneficial for the people who want to go for a life insurance policy. It provides protection and security to the individuals. It does not have any value after it is discontinued. You can get the cash value only after paying the new premium for at least a one year. Irrespective the policies taken in the past, one can take the benefits of term life insurance. It is really amazing to see that now people have different options of life insurance policies to choose from.

Term Life Insurance can help to fulfil the requirements like supporting dependents, educating children and paying estate taxes. If you have more insurance coverage, it is better to discontinue the previous one and continue with term life insurance policy because of the new features and plan the life in a better way. bankrate.com reports:

On a related note: Anyone relying on term life insurance provided through their employer should realize that the coverage will terminate if they lose their job. They may be able to convert some portion of the group term coverage to individual coverage.

All about Term Life Insurance

Life Insurance schemes are often beneficial for the people who think about the long-term plans. There are several types of insurance policies, out of which the Term Life Insurance provides some unique features. Term Insurance covers for period of one or more years. It pays a death benefit to the beneficiary if the policyholder dies during the period the insurance is in force.

Term Life Insurance is the cheapest form of life insurance. It can be renewed for one or more terms even if the health condition of the policyholder gets changed. However, each time the policy is renewed, the premiums may be higher. It is seen that most number of people are now opting for Term Insurance. domain-b.com reports:

This policy is particularly useful to cover any outstanding debt in the form of a mortgage, home loan, etc. For example if you have taken a loan of Rs10 lakh, you will have an option of taking an insurance to protect the loan in case of passing away before the debt is repaid.

Read More: Types of Insurance

Free Term Life Insurance for Working Parents

Term Life Insurance is the simplest and most basic type of insurance. It is also least expensive as compared to other forms of insurance. Term Life Insurance is used to cover expenses incurred by death and to take the place of the policyholder’s salary. The MassMutual Financial Group has introduced a free term life insurance program for working parents in New Jersey. It is known as LifeBridge Free Life Insurance Program.

Under this program, a $50,000 free life insurance policy will be issued to a trust on the life of a qualifying parent or legal guardian. It will help them to pay for the education of their children in case of their death. Under the program, MassMutual (Massachusetts Mutual Life Insurance Co.) will pay the premiums for 20,000 term life insurance policies, each with a $50,000 death benefit. newstranscript.gmnews.com reports:

Each policy has a 10-year policy term. If the insured person dies during that time, the $50,000 benefit will be applied solely toward the education of the children named as beneficiaries. The money will be paid to a trust administered by the MassMutual Trust Co. on behalf of the children.

Read More: Free life insurance for working parents