Term Life Insurance Beginners Guide

Buying life insurance can seem so intimidating.  For starters, the only time it really pays off is when something very sad happens, so it’s quite understandable that no one likes to think about it.  But life’s reality is that sad things happen all the time, and the only thing that could make that worse is leaving your family unprepared.  That’s why if your life includes wonderful things like children or a home, it’s important to make arrangements in advance, just in case.

Term life insurance is the most affordable way to meet short term needs, such as ensuring that there’s enough money for the kids to go to college or pay off the mortgage should something happen.  This type of insurance is purchased to cover a specific period of time, anywhere from one to thirty years, with a payout level you select.  One of the best features of term life insurance is the fixed premium, so you’ll always know exactly what amount to budget.  The cost of the policy is based on your age and health at the time of purchase.

Begin the process of securing term life insurance by determining the resources your family would need.  Consider what your annual income is, how many dependents you have, and what expenses would continue even when you are gone.  What would your spouse need to pay for four or five years of college tuition for each child?  How big is your mortgage?  If you’re not there, do you want your spouse to stay home with the children through a difficult time, or would she/he be able to work too?  Are there any other outstanding loans or obligations your family would face?

One important thing to remember when purchasing term life insurance is that there is no savings component to this type of policy. Your premiums only cover the cost of the policy, but it does ensure that your loved ones will be paid the full amount if you should die.  It is possible to choose a “convertible” policy which can be converted to permanent life insurance when the term expires; if this is something you’re interested in, ask about it before you buy your term policy.

Once you’ve identified the amount needed, compare quotes from multiple term life companies.  Based on their claim experience, you may be surprised at the range of rates you receive.  Shopping online can actually make this pretty easy.  After you’ve purchased your policy, other than paying the premiums, you won’t have to worry about taking care of this again, unless there’s a change in your responsibilities, like having another child or buying a more expensive home.  If that happens, you’ll already know what to do, and in no time you’ll secure the resources to protect your family even if you’re not there.