The Advantages of Term Life Insurance
July 8th, 2006 Insurance
Life insurance is one of the most important purchases any person can make, and like other forms of insurance, life insurance is designed for protection, in this case the protection of your family in the event of your untimely demise. There are many kinds of life insurance on the market, of course, but term life insurance is the most affordable, and the easiest to understand.
Term life insurance has a number of important advantages, such as:
- Lower cost – while whole life insurance, designed to be an investment as well as a death benefit, can be very expensive, the premiums on term life insurance tend to be much lower and more affordable. While whole life insurance policies can run thousands of dollars power per year, the annual premiums on most term life policies are measured in the hundreds of dollars instead.
- Greater simplicity – term life insurance is also much easier and simpler to understand, and it provides greater ease of shopping as well. With term life insurance you simply pay a low monthly premium based on the length of the term and the amount of coverage chosen. The only decisions you need to make are the term (10 years, 20 years, 30 years, etc.) and the amount of the death benefit.
- More choices – while whole life insurance is designed to be an investment, it is often not a very good one. In most cases the better strategy is to take out a less expensive term life policy and invest the difference in cost on your own. In most cases the return you are able to achieve will be better than the returns on a comparable whole life policy.
- Short term options – term life insurance is a great choice for short term needs, such as covering the cost of the mortgage or the cost of college tuition. For instance, a parent could purchase a term life policy equal to the cost of college tuition, while a homeowner could purchase a policy that is equal to the outstanding balance on the home mortgage.
As you can see, term life insurance has a number of important advantages, and there are many good reasons why a worker would want to choose one of these great policies to protect themselves and their families.