Top 10 benefits of term life insurance
Convenient, cost-effective coverage for financial peace of mind.
When loved ones rely on you, you want to protect them, no matter what happens. A term life insurance policy is a cost-effective way to get comprehensive coverage and feel more secure about your family’s financial future.
What is term life insurance?
Term life insurance provides coverage in case you pass away during the policy term. A term life policy stays in effect for a specific length of time (e.g., 10, 20, 30, or even 40 years). Some families prefer to have coverage during their working years to help replace their income in a worst-case scenario. Many life insurance providers also cover stay-at-home partners, whose contributions at home also financially benefit the family.
10 advantages of term life insurance
Any life insurance policy has its advantages. Some benefits of term life insurance include the following.
Affordable coverage
Compared to other forms of life insurance, term life insurance tends to offer lower rates for the same amount of coverage.
For a 30-year-old in good health, a 20-year, $250,000 term life policy may only cost a few hundred dollars a year. A 40-year-old in average health seeking a 20-year, $1 million term life policy may see average monthly rates of around $83 for women, and $103 for men. A whole-life policy for the same coverage amount averages more than ten times as much.
Your age, health, tobacco use, lifestyle factors and more impact your rates. The most accurate way to estimate what you might pay in premiums is to get a quote based on your individual information.
Level premiums regardless of health changes
When you get a level term life insurance policy, you’ll typically submit detailed health information and have an in-person medical examination. This information gives the life insurance company the fullest picture of your health to provide the most accurate rates.
If you develop a health condition after you’re covered, though, you don’t need to update your health information with your life insurance provider. Your coverage and premiums won’t change — even if your health worsens over time.
Accelerated application options
Some insurance providers also offer term life insurance without a medical exam for eligible applicants. This option may be a good fit if you are in excellent health. You may be able to get approved almost immediately and skip the inconvenience of a medical appointment and blood draw.
Financial peace of mind
You have hopes and plans for your family. Besides staying on top of regular household bills, you may be planning to send kids to college, pay off a family home or give your loved ones opportunities like travel. If something were to happen to you, money from a life insurance benefit could help your family fulfill those plans even if you’re not there to provide for them.
Tax-free benefits
Generally speaking, life insurance money isn’t subject to income tax. In other words, you can have additional peace of mind knowing that your loved ones can use the full amount of the coverage you’ve put in place.
There are a few exceptions (for example, interest on life insurance money is taxable), so check with a tax professional or financial advisor if you have any questions.
Avoid probate
Probate is the legal process of validating and executing a person’s will to distribute their estate after they die. The process can take months or years to complete. Term life insurance benefits go directly to the beneficiary without going through the probate process. It can be helpful for loved ones to have access to funds from a life insurance policy more quickly.
Life insurance riders for extra protection
A basic policy can be easy and straightforward. That said, some people prefer some extra options. That’s where riders come in. An insurance rider is an additional form of coverage you can add to your policy (the rider cost adds to your premium).
Examples may include a Term Rider, which lets you stack term coverage, or a Child Rider, which covers your children’s lives until they’re 25. One of the most popular riders you may have heard of is the Accelerated Death Benefit Rider. These are sometimes called ADB for short and allow you to use a portion of death benefit money to pay for your care for a terminal illness. At Legal & General America, ADB riders are included in all our term life insurance policies.
Convertible policy
When it comes to life insurance, the first decision is whether to choose a term or permanent policy. You may not need to make the choice right away. A convertible policy starts as term but includes the option to change the form of insurance to whole life. This can be a way to get the best of both worlds — affordable term rates, with an option to switch to permanent coverage later on if you need it.
Flexibility for premium payments and death benefit payout
In many cases, you can adjust the timing of your premium payments. You may be able to pay premiums on a monthly, quarterly or annual basis. This flexibility for premiums can help you make life insurance payments more convenient in your budget schedule.
When you claim a life insurance death benefit, you typically have options for how to receive the money, as well. A beneficiary may choose to take the benefit money as a lump sum or receive a portion of it monthly for a certain length of time until they’ve received the full amount.
Simple and convenient
One of the advantages of term life insurance is its simplicity. While complex life insurance policies can offer additional components like a cash value account or investment options, these may involve more details and hassle than they’re worth to you (and these policies often come with higher premiums as well).
For many families, life insurance has a simple purpose: to protect your loved ones’ financial stability. Term life can offer straightforward, convenient coverage, so you can set up a policy to cover your needs and get back to the life you love.
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