Life Insurance

For individuals who might have budget concerns, term life insurance provides an option for you to obtain temporary life insurance at a reduced premium over a permanent life insurance policy. Term life insurance policies can provide large amounts of protection for a specific period of time for small initial premiums. Typical policy periods range between five and 30 years.

Many families purchase term life insurance during the child-raising years for additional protection that is more affordable. After the term is up, there is an option to continue the policy with a higher premium or convert to a permanent life insurance policy.

Term Life Insurance Benefits

There are many reasons why individuals or families choose term life insurance policies over permanent life insurance. One of the main reasons is the initial affordability. Most companies that offer term life insurance policies offer them with adjustable premiums, meaning that the cost of the policy can increase or decrease throughout the term; but can never be increased beyond the maximum premium as stated in the policy.

Many term life insurance policies allow the policy holder to renew the policy when the term is up, The cost of the policy is increased each time it is renewed in most cases.

The best term life insurance policies can be converted into a permanent life insurance policy.

Compare Life Insurance

A permanent life insurance policy offers a few additional benefits over a term insurance policy, which is why many people with a term policy will convert to a permanent policy when their original term has ended. A permanent policy, (such as a whole life policy), has fixed rate premiums and protects your family members throughout your lifetime. A term life insurance is only good for the length of the term, unless it is renewed or converted to a new policy when the term date is reached.

A permanent life insurance policy also allows policy holders to borrow or withdraw money against the cash value the policy builds. The value that a permanent policy builds is tax deferred. Some policies will also generate dividends, although there are no guarantees. A term policy will not generate dividends no build cash value that can be borrowed against.

Determine Your Personal Life Insurance Needs

It can be complicated to figure out how much life insurance you need. Basically, it's like saying "how much money would my family need if I died today?" There are many factors you'll want to consider when you are determining how much life insurance you require, including:

Amount required to pay off mortgage
Amount required to pay off debts; credit cards, student loans, car loans, etc
Amount of your current annual income your family would need each year, and for how many years
Amount needed to pay for funeral costs
Amount needed to help pay for your children's education
Amount you already have in savings, CD's, 401K, investments

These factors can help you figure out how much life insurance, and the type of life insurance you'll want to carry in order to ensure your families needs are met in the event of your untimely death.