For many years there has been much debate on whether a person or family should purchase term life insurance as a means of providing financial security in the event of premature death. Obviously, a term life program is better than having no protection at all and we will look at different situations where term life insurance may be just the right buy.
A young single person who has little financial obligations
There are two ways to look at this situation. Yes, this person is young and may not currently have a desperate need for life insurance. In the event of the death of this person, would anyone suffer financially? Are there outstanding debts like student loans or auto loans that someone would be responsible for paying? A small life insurance policy would not only pay final expenses, which could reach several thousands of dollars, but would also provide funds to retire any existing debt. The next question to ask is – “Does this person intend to remain single for the rest of his/her life”? If not, buying a 10 or 20 year term life insurance policy at this younger age will do three things – (1) It will provide insurance coverage currently needed at a very low cost. (2) It will provide additional insurance coverage at a time when this person decides to get married and start a family. (3) It will lock in a low premium and guarantee the right to convert to a permanent form of insurance no matter what the person’s health condition may be.
A family wants to guarantee the retirement of a mortgage
In today’s economy, many families cannot afford to purchase a permanent life insurance policy in an amount that would completely retire a mortgage in the event of the death of the breadwinner(s). If you have a 20 or 30 year mortgage and your goal is to retire that mortgage in the event of premature death, a 20 or 30-year term life insurance policy may be just what you need. This part of your life insurance program should be specifically earmarked for the mortgage, this way, at the time your mortgage is paid off, so is your life insurance.
A young couple on a tight budget
Many young couples just starting out find it very difficult to work a large life insurance premium in their budget. A term life insurance program will give them the financial protection their family needs for a very low cost. It locks in their ability to convert to a permanent form of insurance at a point when their income will be higher and their expenses may be less.
Just bought a $30,000 sports car
Credit life insurance is extremely expensive, oftentimes up to ten times what a normal term life insurance policy would cost. Usually the credit life premium is figured in with your auto loan, so you are actually paying interest on your credit life premium. A 10-year term life insurance policy will accomplish the same goal for a much lower out of pocket cost, plus you will have the right to renew it if the need is still there.
Term life insurance was designed to provide financial protection for a specific period of time. Many people purchase term insurance with the expectation that it will provide financial security for their families no matter when premature death can occur. As each term expires and the policy is renewed, the premium will increase based on current age and in many cases the cost becomes prohibitive and the policy is allowed to lapse. The only way to guarantee that the desired funds will be there no matter when you die is through a program of permanent life insurance.
Please feel free to contact us to see the Strategic difference. You and/or your company will not be disappointed. We look forward to serving your insurance needs.