Term Life Insurance: Everything You Need to Know

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70 NEWS JAPAN - Term life insurance is a vital way to financially protect your loved ones after you die. Obtaining it offers peace of mind. It also guarantees your debts will be covered and your loved ones will be provided for.

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Life insurance is also a valuable estate planning and tax saving tool. Life insurance debts are exempt from federal taxation. A financial professional may advise one to use life insurance benefits to help pay for estate taxes accumulated upon the death of a loved one. Whether you have no life insurance, or you haven’t reviewed your policy in a while, it is always a good idea to be aware of your options and be prepared.

Term insurance is arguably the least expensive and easiest type of life insurance you can purchase. It provides basic protection against your death. Your beneficiary receives a lump sum in an amount of your choosing in such an event. This type of insurance is also temporary. It provides coverage for just a designated period of time. The typical time span is during your working years.

If you’re unsure of how much to designate for life insurance, consider using your mortgage balance as a base amount. If a couple relies more on one spouse’s income, think about making the higher-income spouse’s policy even larger than the basic mortgage amount so the lower-income spouse has something left over after the mortgage is paid.

Starting a family? Consider adding additional term life insurance. Some financial experts suggest adding 10 times your annual income if you have kids under 10 years old, and five times your annual income if you have kids over 10. If you can’t afford that much coverage, just do what you can. Less coverage always beats zero coverage.

As previously stated, term life insurance is in place for a period of time designated by you. The most common terms are 10, 20 and 30-year periods. The insurance policy continues to be valid for as long as you pay the premium. One of the benefits of term life insurance is the fact that the premium amount will never increase, regardless of your health's condition.

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A typical term life insurance coverage policy also guarantees a designated dying benefit. You set this specific amount and it will never change, regardless of the length of the policy. This means the insurance provider will pay that exact amount to your beneficiaries whether you die on the first day of coverage or the last.