Friday, 4 May 2012
The primary reason to have a life insurance policy in place is to make sure your family will be financially protected in the event you pass away. When you’re looking for a life insurance policy, you have two fundamental choices: whole life or term life coverage. Each has its advantages and disadvantages, which makes it difficult to choose the one that’s right for you. Following are a few facts about term life insurance that may help you decide which policy is in your best interests.
You Pick the Coverage
One nice thing about a term life policy is that your choices of coverage are nearly limitless. In fact, the extent of your coverage is limited only by how much money you have to spend for a policy. A term life policy is usually the choice for single people and for those who are married but just starting out in the workforce. This choice is usually made because the premiums are considerably less than they would be for a whole life policy. The object of getting a term life policy is to make sure your family will be provided for if something happens to you, but to do so at a rate you can afford.
You Pick the Term
With a term life policy, you get to pick how long the term is going to be. You can get anything from a one year term to a policy that will run for more than 25 years. The advantage to getting term life coverage is that you can make sure you’re giving your family financial protection for a relatively low price. Because a whole life policy protects you from the time you take out the policy until you pass away–providing you make your payments on time–having a whole life policy is attractive. If you take out a term policy for a short period of time, you will have the option that much quicker of choosing whole life protection instead.
The Benefits Can Remain Level, Increase, or Decrease
A fact about term life insurance that some people don’t take into consideration is that the benefits can increase, decrease, or remain the same, according to the stipulations of your policy. The type of term coverage you choose will depend a lot on your financial situation at the time you take out the policy. It will also vary according to the size of your family and the ages of your children. Your insurance agent will be able to explain the advantages of a level, increasing, or decreasing term life policy.
Term Insurance Is More Affordable
If you’re just starting out in the workforce, but want to make sure your family is financially protected, you will probably choose term life over whole life–because it’s cheaper. Young people have to prove themselves in the workplace, so they naturally make less money when they’re starting out. Getting a term life policy makes sense because the rates are lower. Due to the way term life policies are written you can tailor a plan to meet your needs and budget.
You Have the Option to Renew
Another good thing about term life coverage is that when the policy expires you have the option of renewing the term policy or changing over to a whole life policy. The older you get, the more you will have to pay for insurance coverage. Sticking with a term policy will enable you to go on receiving adequate coverage at reasonable rates.
Cost Is Based On Your Health
When you take out a term life insurance policy, your rates will be determined, in part, on your general health. If you’re relatively healthy, your rates will be quite low. When the term ends, you will once again have to undergo a physical to determine your overall health. If you haven’t suffered from any significant health problems in the interim, your rates will continue to be low.
Term Life Coverage May Have Tax Breaks
Choosing term life coverage may benefit you in another way–it is possible that you’ll be eligible for tax breaks. In order to qualify for any possible tax break, you must belong to a group plan through your employer. If you are, the cost of your insurance is paid before taxes are deducted by your employer. That means you aren’t paying taxes on your insurance payments. It would be a good idea to consult with your employer and tax attorney to see if you qualify.
Guest post from Payton Price. Payton writes about term life insurance for TermLifeInsurance.org.