Term life insurance is one of the most common types of life insurance. (Whole life is the other common form of coverage.) The biggest difference between the two is in the cost and the number of years of coverage.
Here are five biggest benefits of term life insurance.
1. Term life insurance is less expensive than whole life insurance.
This fact alone is a huge benefit. Having a comparatively inexpensive option is a huge plus. If the cost is keeping you from buying coverage, rework your budget to find an extra $30 to $50 a month. That could be as simple as brown bagging your lunch for a week. Or having an at-home date instead of going to dinner and the movies.
2. Term life insurance allows flexible coverage.
Term life insurance is very flexible. Young professionals and families benefit from it because they can usually change the term length when they get a new policy. A single college grad might get a ten-year $200,000 policy. This may be enough to pay off student loans and pay final expenses if they pass on.
By the time the term is up, the college grad might be married and planning a family. Now, they can get a 20-year $750,000 policy. Their spouse and children will have sufficient financial support up until the kids reach adulthood. After that term ends, another ten-year policy might protect the policyholder until retirement. You can likely see how this flexibility might help policyholders.
3. Term life insurance gives you more money to invest.
Term life insurance is usually less than half the cost of whole life insurance. If you're changing from a whole life to a term life insurance policy, you will notice the savings. Do your future self a favor and invest the money you are saving.
4. Term life insurance isn't taxable.
Life insurance payouts, including term life, are not subject to taxes. When you or a loved one pass on, the beneficiaries are not taxed on the money.
5. Term life insurance is easy to apply for.
Most life insurance policies require a physical exam. The thought of this can scare some people. Yet, the process is usually as simple as a person coming to your home to draw blood, check your weight and ask you a few dozen questions. For most people, it's super simple. Fill out an application, do the exam and then pay your premiums.
It's essential to weigh the pros and cons of term life insurance policies that you are considering. See how they match up with your needs. Then consult a professional at Sovereign Financial Group for more information.