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Deciding whether you need Term Life Insurance

By Compuquotes Team on June 21st, 2008

Term life insurance can be a useful product, making sure that your family and loved ones won't have to face unneeded financial strain in the event that you should pass away unexpectedly. Not everyone needs term life insurance, however, as some people prefer whole life policies or simply choose not to have life insurance at all. While the insurance (or lack thereof) that you choose is completely your decision, here is some basic information that might help you to decide whether a term life insurance policy could be just what you're looking for.

The first thing that you need to consider is exactly how much insurance coverage you're wanting to get. Obviously different policies will be available for different amounts, but if you're considering term life insurance then you should also take into consideration the timeframe during which you'll have the insurance coverage. You can choose shorter-term policies such as a 1-year or 5-year renewable policy or a longer term such as a 20 or 30 year policy, and with many insurance companies you can even choose the age at which you'd like to have the term end  some people choose term life because they want coverage during the years that they'll be working, while others want to be sure that their family will be taken care of during the years that they have small children at home. If you're just looking for insurance coverage for a set period of time, then term life might be what you're looking for.

Another consideration that's very important is the price that coverage will cost. Term life insurance tends to be less expensive than more permanent policies, and many of these policies feature locked-in premiums so that you'll be paying the exact same amount for the entire time that you'll have the policy. For individuals with whom pricing is a major concern term life insurance can at the very least provide a temporary low-cost insurance solution, allowing them to have the insurance coverage that they're looking for during their policy's term and then letting them get a more permanent policy afterwards when they can better afford it.

It's important to realize that term life insurance isn't right for everyone, of course. While many permanent insurance policies have a savings portion included in the policy in addition to the standard coverage that's provided, term life policies only provide the coverage itself. There are policies known as Return of Premium policies which will return the amount that you've paid to the insurance company once your policy term has ended, and these policies have started becoming much more common with term life insurance providers. The downside of this is that the Return of Premium policies cost more than standard term life policies do, and because portions of the money you've paid are invested so that the company can make a profit before the premiums are returned there may be additional difficulties should you attempt to cancel the policy early.

In the end, it's your decision as to whether you purchase term life insurance, permanent life insurance, or no insurance at all. Stop to consider exactly what it is that you're wanting from life insurance protection and you should be able to determine whether term life insurance would meet your needs or not.

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