What is Life Insurance?

Life insurance is a contract that pays a set death benefit when the insured dies. A life insurance policy is designed to give financial aid to the beneficiaries (spouse, children, etc) of the insured person.

Example: A husband may purchase life insurance so he knows his wife and children will have money available if he suddenly died.

While the life insurance market is flooded with options, the simple idea of choosing the right policy to fit your needs is easier than it seems. This process is simplified by breaking down life insurance into two basic types.

The two most basic types of life insurance are (1) term life insurance and (2) permanent life insurance.

What is Term Life Insurance?

Term life insurance is the most affordable coverage. Your life insurance pays the death benefit for the insured only if they die during that policy term. Your term policy is set for a predetermined amount of time. Typically these policies range from one to 35 years. Twenty years is the most common of the policy terms.

Perhaps the best advantage of having term life insurance is that the initial cost is lower when compared with permanent life insurance. Your monthly premiums typically just cover your death benefit. This death benefit being the lump sum amount paid to the beneficiary if the insured died during the course of the policy term.

Term insurance does not have the more typical features found in permanent policies. A  permanent life policy may include policy loan provisions and cash value accounts.

If you are on a restricted budget, then term life insurance might be the choice for you. It's a great choice for young families and newlyweds. Individuals can buy very high levels of coverage during a time when protection is needed the most.

Term life insurance also offers a great benefit when covering family needs that will fade away over time. It depends mostly on the financial needs and goals of the insured.

Example, The applicant may wants to make sure their child's education will be covered. In this case, the applicant would want to buy a term life policy to cover that amount of time. A new parent might purchase a thirty year term life policy to cover a newborn's college education as well as their future sibling's education.

Think you need life insurance? Let us find you a Term Life Insurance Quote.