3 Reasons You Should Choose Term Life

By Tes Kurtz on February 19th, 2010

If you are thinking about purchasing a life insurance policy, here are three reasons you should consider term life.

1. Simple Life Insurance

Term is pure life insurance coverage. This type of policy provides financial protection for a certain amount of time--the length or term specified in the policy--and has a predetermined benefit. Should the policyholder pass away within the time period specified in the policy, the beneficiary receives the benefit stated within the policy.

Although you can add features to your term policy through clauses called riders, a term policy is simple life insurance coverage. Other life policies, such as whole life, universal life, or variable life, are more complex because of their structure and investment features. Term insurance is different because it's just straightforward life insurance coverage.

2. Versatile

The beauty of term insurance is its versatility--you can tailor the length and amount of your policy to fit your needs.

Choose Your Term Length

Your policy can be as short as one year and as long as 30 years; you can select nearly any term length to fit your needs. The most common term periods are 10, 20, and 30 years.

Term life is meant to cover your temporary needs; however, temporary does not necessarily mean short-term, it just means your need is not permanent. For example, you may be considering a term policy to provide financial security through your youngest child's expected college graduation date, which you anticipate to be within the next 12 years. In such an instance, you might select a 15-year term policy.

Select the Financial Benefit

You can also choose almost any insurance coverage amount to fit your needs. The face value, the amount beneficiaries receive in the event of the insured's death, can range from under $100,000 to several million dollars.

If you are looking for a way to roughly estimate the amount of coverage you should purchase, you should consider the needs you are trying to meet. Are you looking to replace income? What about your mortgage or other debt? Most likely you want to provide financial security for a variety of reasons. Write down your current debt obligations, your income replace needs, and your current and future financial obligations.

This may provide you with a good starting point, but to determine a more accurate face value for your insurance needs, you should consult the life insurance calculator, or seek advice from a qualified agent.

3. It's Cheap

Because term insurance usually doesn't have fancy bells and whistles, such as an investment feature, this is the cheapest type of life insurance. Term life insurance provides coverage only, which is why it is so affordable. Other life policies, such as whole life, are meant to cover a policyholder for a lifetime and includes an investment feature.

Term life insurance provides insurance coverage for a predetermined length of time or a stated face amount. Insurers can provide this coverage at relatively cheap rates because they have a calculate risk for a specific benefit amount and specific length of time.

In order to keep your term insurance policy affordable, you should only purchase a policy with the term length and coverage you need. The shorter the term and the smaller the face value, the cheaper your life insurance premiums should be.

With all of its benefits--affordability, simplicity, versatility--term life insurance is an excellent way to protect your loved ones. Because it is so affordable, it is wise to buy a policy with a death benefit that covers your family's monetary needs for the appropriate number of years. Compare quotes from multiple insurance companies to choose the best policy for you and your family.

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