How To Know the Benefits of Term Life Insurance

Many individuals hear about the costs of permanent life insurance policies and decide not to get insured just because they think they can't afford it. They end up leaving those important to them uncovered simply because they feel they don't have enough money. What most people don't know is that there's a cheaper alternative to the high premiums of permanent life insurance plans. The money-saving option outside of permanent life insurance is term life insurance.

When shopping for life insurance, be aware that there are two basic kinds:

  1. Permanent life insurance, where coverage lasts throughout your lifetime so long as you pay the premiums.
  2. Term life insurance, in which you can set the amount covered and how long the policy will be applicable. Because the coverage of term life insurance is bound to a fixed amount of time, premiums are comparatively lower than those of permanent life insurance policies.

Permanent life insurance is treated like an investment, and so the expensive price tag of such a policy comes naturally. Permanent life insurance premiums can have you spending thousands of dollars a year. Term life insurance policies, on the other hand, can cost you only hundreds of dollars a year.

Another benefit of term life insurance policies is that they're relatively easy to understand and they are customizable. All you do is pay a monthly premium based on the length and amount of coverage you decide on when purchasing a policy. Depending on the provider, you can select any length between one and thirty years, with coverage amounts ranging from $100,000 to millions. Say you're paying off a car, and the payments will continue for four years. You can match that amount with your term life insurance plan, and set it for four years as well. It's that simple!

With term life insurance, you'll be free to invest your money yourself, instead of having the insurance provider invest it for you, as is the case with permanent life insurance. Insurance providers are usually conservative in investing your money. If you're a maverick investor with remarkable skills, you may want to save the extra money you would have spent on a permanent policy and make it grow. The thousands of dollars you might have ended up spending on permanent life insurance premiums could go into the stock market and earn you thousands more in return.

Term life insurance policies are best for short-term needs. They're usually used to cover mortgages and education fees. You could purchase a term life insurance policy that expires when you're done paying for your home, or get a policy to match the length of your kids' college education. The great thing about term life insurance is that you can get covered for what you need, and for exactly how long you need it. Of course, you'll want to get your insurance from a provider you can trust, so be sure to do your research beforehand. With the right insurance provider, you will discover that term life insurance can be a very wallet-friendly thing.


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