As the name suggests, term life insurance works by allowing the individuals to insure their life for a specific ‘term’. These segments refer to specific time period for which the term insurance is valid. Upon expiry of the predefined time period, the contract has to be renewed for the next time period. The flexibility and affordability of term life insurance have made it a very popular option in the life insurance circuit. Here are some distinct advantages that define the concept of term life insurance.
- Affordability
The biggest benefit of investing in term life insurance is its price factor. With inflation rampant in the US, families are not able to easily put aside significant sums of money towards insurance. In such cases (and there are several of them), people find it very convenient to opt for term insurance. It works out much cheaper than investing whole life insurance while not compromising on the benefits.
- Flexibility
The flexibility factor is very well-defined in term life insurance polices. The client has the option of setting his own time periods which may range from 5 years to 10 or 15. This way he controls the duration as well as the premium he has to pay.
- Sizable pay-outs
Given the fact that probability of death is smaller in smaller time durations, insurance providers are able to give out significant pay-outs in case of an untimely death during the validity of the policy.
When should you consider opting for term life insurance?
- Getting married: Getting married usually means investing in new purchases and generally looking at higher expenses. This would be a good time to purchase term life insurance as your financial resources are likely to be tied up elsewhere.
- Having a baby: Starting a family means impending expenses. Term life insurance would come in handy.
- Children preparing to go college: College fees are very high. If you have a couple of teenagers gearing up for college, then you would be more likely to invest in term life insurance.
Term life insurance is great for taking care of times when there are temporary expenses that will go away in a while. There are several online websites that will help you analyze how much insurance you really need. It is very important not to stay underinsured as being underinsured is nearly the same as not being uninsured at all.
