5 Solid Reasons to get Term Life Insurance
No one likes to think about dying, but we have to plan for the future. What would happen to your loved ones if you were no longer around? Would they be able to get by? Even if you aren’t the main breadwinner in the family, you are still an asset to the family. No matter your position in the household, there are many reasons you should consider term life insurance.
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Term life insurance provides a payout should you pass away within a specific term. You can buy the insurance for any term up to 30 years. The earlier you buy it, the less it costs, in most cases. The life insurance company will determine your premium based on your age as well as your health. They determine the ‘riskiness’ of the coverage. In other words, they determine if they would have to pay out given the term you desire.
Even though it’s another monthly expense that you probably don’t want to pay, it’s important. Having proper coverage can help your loved ones in ways you might not even realize.
Keep reading to learn the top five reasons you should consider term life insurance today.
Term Life Insurance is Self Explanatory
Whole life insurance can get very complicated. It’s more of an investment vehicle than an insurance policy. You get tax-deferred gains and you have the option to borrow against your funds. Determining the cash value and affording the premiums are a whole different story, though. It used to be a popular policy, but today, people are much more adept at investing their money, thanks to the internet, that whole life policies aren’t as common any longer.
Term life insurance pays your beneficiaries in one lump sum upon your death. If you are still alive when the term runs out, you no longer have insurance coverage. You’ll have to take out a new policy with a new term and coverage amount. Term insurance covers you in the face of the unexpected and covers your loved one’s needs if you plan accordingly. There are no guessing games or high premiums. What you see is what you get with this insurance.
You Can Pay Off the Mortgage
If there’s one thing you could hope for your loved ones if you passed, it’s probably that they have a decent place to live. If you pass on, whether you were the breadwinner or not, your loved ones have to figure out how to cope.
If your term life insurance is enough to pay off the mortgage, that takes one very large burden off their shoulders. If they know they can stay in their home, they can focus on their grief and moving forward, rather than stressing about the finances.
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When you set up your life insurance, take into account the outstanding principal balance on the mortgage. You may also want to consider the cost of taxes and insurance on an annual basis. While you probably can’t cover them for the rest of their lives, you can at least provide them with a few years of comfort.
You Can Pay Burial Expenses
If there’s one thing your loved ones don’t want to think about while coming to terms with their loss is paying for your burial expenses. It’s not that they don’t want you to have a proper burial, but they don’t want to think about how they will pay for it. In fact, they probably want to give you the best sendoff they can, but if finances are an issue, they won’t be able to do that.
The average funeral and burial costs around $7,000. That’s not chump change. If you don’t plan ahead, the burial could put your loved ones in serious financial distress. Many funeral homes won’t even talk to people that don’t have their funding in place. Taking this stress off your loved ones can help them get through the grieving process a little easier.
You Can Choose the Term
You can decide how long you need coverage for with term life insurance. For example, let’s say you have very small children today. If you bought life insurance right now, you’d probably want to cover the kids all the way through adulthood. You may choose a term up to 25 or 30 years. Maybe you want enough money for them to go to college or you want to pay for their wedding. These are things you must consider when choosing the term.
If your needs are more short-term, you can adjust accordingly. Maybe you want enough coverage until you pay your mortgage off. If you only have 10 years left on the mortgage, you can take out a policy for that long. This way you know whether you are here or not, your loved ones can stay in the home.
You should give your future a good long evaluation. What do you want to see happen? Whether it’s helping your kids, spouse, or other relatives, consider everything you need to cover. Are you in over your head in debt right now? Do you want to leave your loved ones with that debt? If not, consider adding that into the amount you need. How long do you think before you’ll get out of that debt? If it’s not anytime soon, increasing your coverage will help your loved ones should you pass away unexpectedly.
You Can Cover the Expenses of a Stay-at-Home Parent
It might not seem necessary to carry coverage on a parent that does not work, but they have value too. Consider everything that a stay-at-home parent does in a day. First and foremost, they care for the children. If that person is no longer alive and you have to go to work, who will care for them? You may have to pay for daycare or a babysitter.
Did your spouse care for the home, pay the bills, and cook the meals? You may need someone to help do these things in your loved one’s absence. While you might not need a large policy to cover the mortgage or debts, you may need some extra money to make up for what your loved one can no longer do for you.
Term life insurance can be very affordable if you secure it early in life. Before you are ever thinking about dying or taking care of a spouse, you should consider a policy. If you don’t get a policy in your twenties, at the very least, consider it once you are married and definitely when you have children. It can save your loved ones a lot of financial distress while only costing you a small amount of money each year.
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