Should You Buy Term Life?
Do you really need term insurance? There are other options, so, is term life insurance for you?
Some people are convinced there are no other choices.
Ever consider why this type of life insurance is so favored?
Let us take a look at some of the most popular term policies and see whether or not they would fit your unique situation.
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Why Buy Term Insurance?
- 5 Year Term
Why would one buy a 5 year term policy? If you have a short term need for life insurance this policy may be exactly what you are seeking. You have some outstanding debt that a close friend or relative helped you get by signing on the dotted line with you.
This person had guaranteed repayment of this loan. You don’t want to die and leave your friend holding the bag. The thoughtful thing to do would be to buy a life insurance policy to pay off the debt in case you should die before paying it off yourself.
The 5 year term insurance policy may be ideal for this. This policy is very inexpensive, it has a level death benefit as well as a level premium.
- 10 Year Term
Sometimes people buy this policy because of its low cost even though this is not exactly what they feel they need. This is a short term fix for a need that may be long term.
A family with young children may need a 20 year or a 25 year term policy to protect the family through to the end of the college years but because of cost they use the 10 year term policy until they can afford the more costly policies.
In some cases, on the other hand, the 10 year policy fits. Your only child is age 15 and you want to be certain s/he graduates college even if you are not here. The 10 year term policy may be ideal.
- 15 Year Term
You youngest child is age 10. You will feel more relaxed if you own a 15 year term policy which would provide sufficient income to take care of the family until the last child graduates. This policy is also quite inexpensive. Premiums and face amount are level for the duration.
- 20 Year Term
Perhaps the most popular term insurance policy is the 20 year term life insurance policy. People tend to buy this policy when planning to get married or is they are recently married.
When a child is born that is a good time to buy a 20 year term policy. If you own a business you may want to use this type of policy for key employee life insurance. You could use it also to fund a buy sell agreement for a partnership or corporation.
- 25 Or 30 Year Term
One would purchase any of these policy instead on any of the above if you anticipate a need for life insurance for a longer period of time. Think about it, we normally anticipate a need for a newlywed couple to be for a 20 year duration.
This couple may not want to have a child until after 5 years. You may therefore need a 25 or 30 year policy to protect that child through age 25. What of other additions to the family later on and what if you cant qualify for the life insurance you need when you get there.
You see if you buy a 25 or 30 year term policy from the outset then all is taken care of. It is important to note that the purchase of term insurance from the better life insurance companies allows you the opportunity to convert to permanent life insurance at a later date.