What You Need to Know about Senior Travel Insurance

Term Life Insurance

A common misconception about life insurance is that it’s all the same and that there are only subtle differences between one type of life insurance and another. In reality, you have many different options to choose from when deciding on your plan, but not all of these are created equal in terms of cost and coverage. Term life insurance is one particular type of life insurance that has several important distinctions from other forms of life insurance, such as whole life insurance or universal life insurance. Read on to learn more about 7 things you should know about term life insurance before choosing this type of plan for your needs.

1) How term life insurance works

For non-smokers between age 30 and 65, it costs about $1 per day to get a 30-year level term life insurance policy with a $250,000 death benefit. The cost is higher for smokers and lower for people who are older. Insurance companies payout if you die during that time. Otherwise, you can cancel with no penalty at any time during that period or even take your premiums as cash value (if you buy a whole life policy). You can also refinance an existing term policy to raise your death benefit, change your premium payment schedule or make other changes before it expires.

2) Why do you need it?

If you or a family member has any sort of long-term health condition, especially one that could interfere with your ability to work and earn an income, level term life insurance is often a good choice. Also, if you have young children who depend on your income, it’s a smart idea to get enough coverage so that they will be provided for even if something were to happen to you. If you’re planning on getting term life insurance, there are some things you should know before making your decision. Here are seven things that every person considering level term life insurance should know

3) What does it cover?

If you’re looking for a policy to cover your mortgage or an educational loan, term insurance is not right for you. Term insurance covers your life and nothing else. The maximum payout would be used to pay off any outstanding debts if you died while still owing money, so they can continue to receive payment. Term life insurance is most useful as a way to protect your family financially in case of premature death. If your debts are settled with a term life insurance payout, it’s unlikely that future creditors will be knocking on their door with requests for repayment.

4) Level vs. decreasing term

It's important to understand what a level term life insurance policy and a decreasing term policy are. A level term policy charges you one rate for an entire time period; no matter when you die during that time period, your beneficiaries receive that same amount of money. For example, if you're under 50 and take out a 20-year level term policy with annual premiums of $700, you'll pay $28,000 over 20 years for coverage. If it sounds like a good deal, it's worth noting that there isn't any room for negotiation on those premiums—they stay exactly the same regardless of how healthy or unhealthy you get overtime.

5) Does it increase in value with inflation?

Term life insurance doesn’t have a cash value, which means it isn’t designed to increase in value with inflation. Since its purpose is to cover your remaining mortgage and other debts if you die, a term life policy doesn’t need to be indexed to account for these increasing expenses. And since you can always take out additional loans if necessary, there's no point in paying for term insurance coverage that would pay off more than your outstanding debt upon death. To save money by going with level term coverage only.

6) Who should get it?

If you have a family to support, level term life insurance is an inexpensive way to make sure they’re financially secure in case something happens to you. For example, let’s say you’re 45 years old with three kids and a house worth $100,000—and your spouse works part-time. If you were to die suddenly today, how would your spouse pay for rent or mortgages if your income stopped? A one-year term life insurance policy that costs around $50 per month (and less than $200 per year) can guarantee that at least some of your mortgage or rent payments will be covered. Of course, if money is tight now but things improve down the road—you might be able to cancel or drop coverage later on.

7) What’s the best way to buy it?

The best way to buy term life insurance is through a qualified professional who can help you compare rates and find coverages to fit your unique situation. Whether you’re a parent buying life insurance for your children or a business owner making sure your employees are protected, a professional can help you pick out an appropriate policy and know how much coverage you need. Most importantly, they’ll help answer all of your questions so that both you and your loved ones are as protected as possible. For example, do you want higher payouts if death occurs due to an accident or illness? Do you have any specific needs for dependents or beneficiaries?