Choosing the best term life insurance policy for your needs
Term life insurance may be temporary, but it offers plenty of customization options to give you the coverage and flexibility you need.
Life insurance may not be your favorite topic, but it is an important tool for protecting your loved ones. It offers peace of mind for you and your family if something should happen to you. Term life insurance can often be a good option for many people since it’s generally more affordable and offers flexibility.
When choosing a term policy, you’ll have plenty of coverage options like the length of the policy and coverage limit. Everyone’s needs are different, which makes it challenging to know which policy option to choose. Here are some key things to consider when choosing the best term life policy for your needs.
What is term life insurance?
Before taking a look at the various term life options, you may want to review what term life insurance really is. You can think of term life insurance as temporary life insurance: You pay for a certain amount of coverage (called the death benefit) for a set number of years.
If something should happen to you while your term life insurance policy is in place, a person you choose (referred to as your beneficiary) will receive the full amount of your policy’s coverage limit. That money won’t be taxed, which brings extra peace of mind to your loved ones.
How many years of coverage does term life insurance offer?
When you buy a term life policy, you’ll get to select how long you’d like the policy to last. Different companies have different options, ranging from a 10-year policy up to our 40-year coverage term here at Legal & General America. You can also choose 15, 20, 25, 30, or 35-year coverage terms.
Each term life policy can look a bit different, so it’s important to first identify your goals and needs before picking a policy. The best type of life insurance policy is going to be one that fits your specific needs and lifestyle.
So, let’s say you’re only looking for a policy that will only last as long as you have a mortgage. In that case, you’ll want to look at a policy that lasts the length of your mortgage payment — say, 20 or 30 years. Meanwhile, another person might only need a 10-year policy to provide coverage in case something happens while their kids are attending college.
How do I know how much coverage I need?
As with the length of your term policy, you’ll be able to select from a wide range of coverage limits, known as the death benefit. You’ll want to consider several things when it comes to choosing a coverage limit, such as any debt you have, whether you have savings, and whether you’d like to ensure your family can continue their standard of living if you should pass away.
For instance, if your spouse is a stay-at-home parent, you may want to consider buying enough coverage to replace your annual income for a few years. This allows your family to grieve without abruptly changing their lifestyles even further by drastically cutting expenses.
When choosing your coverage limit, it’s important to also consider whether you have a mortgage or other debt. If so, you may want to factor those amounts into your coverage limit so any debt can be paid off if you pass away.
Often, people choose a term life policy to cover a combination of these and other needs. Try using this life insurance calculator to get a better idea of how much coverage is ideal for your specific goals.
Optional coverage with term life policies
Once you’ve figured out how much coverage you need and how long you need it, you’ll have a few more options available to customize your policy. These optional coverages are called term riders.
A Children’s Life Insurance Rider is a common term rider. Adding it to your term policy provides life insurance coverage for your child if something should happen to them. Another term rider is the Accelerated Death Benefit Rider. It covers your health expenses from a terminal illness by paying out part of the death benefit early.
Other riders are available, and some cost a bit extra while others are added to your policy at no charge. Keep in mind that term riders can’t be added once your policy is in place, so take the time to review your options when you first buy your policy.
How much does term life insurance cost?
As with other insurance policies, the cost of term life insurance will vary for each person. Once you’ve purchased a level premium term policy, your payment (or premium) will stay the same for the length of your policy. One major benefit of choosing a term policy is that the premium is generally lower than a permanent life insurance policy.
Your coverage amount and policy length will impact your premium. Someone who chooses a 30-year term policy with $1 million of coverage may pay more money than someone who needs less coverage over a shorter period of time. Your life insurance company will also look at other factors, such as your age and overall health when determining your premium.
By answering a few simple questions, you can easily receive an estimate for a term life quote. For a more accurate quote, it’s best to reach out to one of our advisors.
Finding the best life policy
Choosing a term life insurance policy means reviewing your goals and needs to determine the right amount of coverage. You have several options when it comes to the length of your policy as well as the death benefit level. Plus, you can choose to add term riders to a new policy if you’d like to bring in additional coverage.
Premiums for a term policy are typically lower than a permanent policy, but getting a quote will give you a more personalized number. If you’d like some help narrowing down the best term life option for you, please contact us and our advisors will be glad to help.
CN06212024-4