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The Benefits of Buying Term Life Insurance

By Compuquotes Team on March 26th, 2008

Term life insurance is often regarded as whole life's little brother - not quite as powerful and not quite as good. The truth is that term life insurance is often the best solution for a short term insurance need. It offers benefits that whole life may not under many circumstances. Among the advantages of buying term life insurance are the following:

Term life insurance is less expensive than whole life insurance.
Because whole life insurance is an investment vehicle, term life insurance premiums are much lower than the premiums that you'll pay for whole life insurance. If your primary reason for buying life insurance is to provide for your family in the case of your death, then term life insurance is a far more affordable option than whole life insurance.

Term life insurance is temporary, making it ideal for time limited needs.
If you were to die tomorrow, what would your family need to survive financially? How would they replace your salary? If you die in thirty years, what financial obligations would your family be burdened with? Chances are that your family will need far less in the event of your death in thirty years than they would need if you die tomorrow. Term life allows you to buy the insurance that you need during the times that you need it most. You can take out a term life policy for ten or twenty years to ensure that your children's education is paid for in the event you aren't there to pay for it - and drop the coverage once it's no longer needed. You can take out a term life insurance policy in the amount of your mortgage when you buy a house to ensure that the mortgage is paid off in the event of your death - and stop paying for it when you've finished paying off the mortgage. Term life is the ideal life insurance for those short term needs.

Term life insurance is less complex so you know just what you're buying.
When you buy term life insurance, you know exactly what you're getting. The face value of the policy and the term it is in force are right up front. You can choose from simple options for premium payments - either you pay level premiums throughout the life of the policy, or you pay a low premium at first that gradually increases as you grow older. There's no guesswork and no fancy gimmicks and investment doubletalk. You're paying for a single promise - if you die, the life insurance company will pay your beneficiary a certain amount of money.

To get the most out of term life insurance, consider the following tips:

Make sure that you have enough coverage. The general rule of thumb in deciding on a face value for your insurance - how much your family will get if you die - is two year's salary, but term life is cheap enough that you can afford to buy a bit more to be sure your family's need are covered.

If, on the other hand, you are purchasing the insurance for a particular need, then suit the coverage to the need. Take out enough insurance to cover your mortgage, or enough to pay your child's college tuition.

Choose the term of your insurance coverage to suit your need.
If you have thirty years left to pay on your mortgage, get thirty year term life to be sure that you're covered until the mortgage is paid off. Likewise, if your intent is to be certain your child's college tuition is paid, choose a term that will remain in force until they finish school.

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