Term life insurance is the least expensive type of life insurance one can buy to be covered in case of death. It is for a specific period of time, usually 10-30 years, and pays out a sum of money upon the death of the insured person.
In exchange for monthly premium payments, your term life insurance provider agrees to pay out a lump-sum payment to your beneficiaries when you die. Term life insurance helps to protect your loved ones financially during the years (term) of the policy. The term of the policy is typically when family would financially rely on the insured person.
You should buy life insurance because you love your family and you want to protect them financially in case you aren't around anymore. Most working people have income that will cease to exist when they stop working. Some people live off of the income from investments, and when they die those investments may continue to pay. In that scenario, term life insurance may not be necessary. If you're single and no one is relying on your income, then life insurance probably isn't for you. If you have dependents term life insurance is a good idea.
Life insurance helps to protect your loved ones and provide a safety net for your family. Term life insurance can be used to protect the lost income from your working years as a result of death. Your policy will help your family to pay off debts, cover the cost of your funeral if you have not planned for it, pay for your widow to continue to live or get back on their feet, or pay for your children’s education, and much more.
Most people buy term life insurance when they marry or when they have children. That’s the beginning of a time when someone else is relying upon you and term life insurance is necessary. When it comes to buying life insurance, the younger you are the better, because life insurance premiums tend to become more expensive the older you are. As a result, the best time to buy life insurance is when you are 35 or younger. However, cheap term life insurance can be bought even after 35 years of age.
Life insurance policies are typically available for people between the ages of 18 and 70 years of age, but some insurance companies will issue a policy well into your 80's, though fewer options exist for this. Term life insurance is typically for 20 or 30 years and therefore you may have to buy a second term at some point in your life if there is still a need for it.
Major life events that may warrant the purchasing of term life insurance include:
Once you have decided that term life insurance is right for you, you will need to select a coverage amount. A coverage amount determines just how much money will be paid to your beneficiaries and the length of your term.
When determining your coverage amount you will want to consider your income, your assets, your liabilities, any other existing insurances, and any other costs you believe your beneficiaries incur. The size of your family and the number of beneficiaries will also help to determine how much coverage you will want to buy. For example, if your mortgage is 250,000 and annual expenses are 75,000, you may want to double or triple that amount in order to provide for your family while they get back on their feet.
You will also need to determine just how long you want your term life insurance benefits to last. Will your benefits last just long enough to help pay off your family's debts or do you want to ensure your young children have enough money to get them through college?
Term life insurance policies typically come in ten, fifteen, twenty, or thirty-year terms. When choosing a length for your term, you need to be sure that your term length covers your family during the years that they rely on your financially. This is usually when you have children in the home. The term of the policy allows you to lock in a rate over the period of time that you want to be covered.
The average cost of term life insurance ranges from roughly $9.00 to nearly $200 a month, depending on several factors. Insurance companies will often use risk classes based on these factors in order to determine the cost of your premium payments. The two biggest factors of cost are the term of the policy and the face value (or benefit paid upon death) of the term life policy.
Some of the factors that can affect the cost of your life insurance are purely demographic. Your age is one factor that can affect the cost of your health insurance premium. Generally, the older you are the more you will pay for a life insurance policy.
Your gender and your health can also affect the cost of your premium. Typically, men are charged higher rates than females and having poor health may also raise your rates.
Other factors that can affect the cost of your insurance premium include family medical history, your weight, occupation, lifestyle, and even where you live. It's important to keep in mind that lifestyle choices such as tobacco usage or having a job with higher safety hazards can result in a higher premium.
Because carriers will evaluate these factors differently it pays to review multiple life insurance carriers in order to find the best life insurance carrier for you.
Your credit score can affect your ability to buy a home or take out a loan, but can it affect the price of your insurance premium? Your credit report can influence your life insurance, but it is just one of the many factors that insurance companies evaluate when calculating your rate. Generally, your actual credit score does not affect your life insurance rates. However, some of the other information on your credit report can. If you have a history of bankruptcy, this may affect your life insurance rates.
There are several ways that you can save on term life insurance.
You can buy early.
The younger you are when you buy your policy, the cheaper it will be, as you tend to be healthier and there is less risk for the insurance company. Many people buy life insurance as soon as they have a spouse or a child.
Shop around.
Don't just settle for the first insurance company you find. Compare rates and coverages to find the best option for you.
Choose to live a healthy life.
By avoiding high risk behaviors such as smoking or choosing a low risk occupation, you can help to decrease the rate of your life insurance policy. You can also make every effort to eat healthy, get plenty of exercise, and see your doctor on a regular basis.
Buy a longer term instead of renewing several shorter terms.
Buy a longer term instead of initially purchasing a short term that you later decide you want to renew. When you renew your policy, your rates will be higher because you're older now.
Bundle your insurance.
Many insurance companies offer discounts if you choose to bundle your insurances. See if you can bundle your life insurance just like you can bundle home and auto insurance.
Now that you have made the decision to purchase a term life insurance policy, you may be wondering just where you should purchase your policy. Just like you can buy clothes or books online, you can also shop for insurance policies. We tend to love online shopping because it's quick, convenient, and can be cheaper than going to a store. But is this the right option for you? Another option is that you can purchase your insurance through a broker. When you shop for life insurance through an agent or broker you may receive more guidance and the opportunity to discuss options in greater detail. However, you will pay a premium for that service as an agent or broker has to earn a living too.
Getting quotes from multiple life insurance companies can be a time-consuming process, but fortunately that's where Best Life Insurance Companies is a very helpful resource. Our team of licensed insurance agent analysts have done a lot of the research for you. We've conducted extensive pricing research with different consumer ages and in different coverage amounts to see which life insurance companies provide the most affordable insurance premiums. Some companies clearly provide better pricing and cheaper life insurance than others. That's a major factor in how we've developed the list of best priced life insurance companies that you see recommended on our site. To save time and get the highest chance of finding the cheapest insurance from a highly rated life insurance company, start getting quotes from best ranked companies on our list and compare the pricing you get.
Another way to reduce cost, is to reduce the scope of coverage and or get lower coverage amounts. However, reducing monthly premiums in this manner increases the risk to you because if something does happen you may not leave enough money for the people you leave behind.