Term life insurance is a life insurance policy that provides death protection coverage at a fixed rate for a selected period of time.
Simply, if you have a term policy and you die within that term, your beneficiary will receive the payout.
There is a saying, "Life insurance is like a parachute. If it isn't there the first time you need it, there is no second chance." If you have a family and assets to protect you should really consider a term life policy. You cannot count on a GoFundMe page to help pay your mortgage, help with your bills, and send your kids to college (well… maybe you can, but is it worth the risk?!).
Term policies are much more affordable than a whole life policy and that is because, it is not worth anything unless the policy owner dies during the term of the policy.
Derek, who is 35, has a 30-year term $500,000 life insurance policy. Derek pays $37 a month to the life insurance company for $500,000 worth of coverage (that's 7 Starbucks Latte's a month). If Derek were to die anytime in his 30 year term, his beneficiary would receive the $500,000 payout. If Derek is alive when the term ends, amazing! The purpose of term life insurance is to protect your loved ones from financial obligations if you are no longer around to provide for them.
Hopefully, you were able to have peace of mind while you were building your net worth. Hopefully, you were able to pay off your mortgage, send your kids to college, and you and your spouse can live off of your savings and investments and you no longer need the life insurance payout to live comfortably.
This is the goal of a term life policy, it is not to make a profit, it is to ensure the ones we love will be taken care of incase the worst-case scenario happens.
Term life insurance is ideal for married couples who are planning, or already have children and also for those who have a mortgage on their home. Because term life insurance is providing financial security for a specific amount of time, many choose to have their term insurance match the number of years on their mortgage. This is because, if a spouse dies prematurely the life benefit will help to not only cover the mortgage but also relieve the financial burden of other expenses.
The ideal time to purchase life insurance is when you are young and healthy. Don't wait until it is too late!
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