Term life insurance is an insurance policy that provides coverage for a specified time period. If the insured was to outlive these specified years of converge, there would be no death benefits provided. However, if the insured passes away while the policy is still valid, the dependents will receive a payout from life term insurance.
Term life insurance stays in effect and provides you coverage from the time you buy it to the time you’ve specified. The lowest duration for term life insurance is 5 years.
Doesn’t this mean that the people acquiring term life insurance are anticipating their death sooner than later? Isn’t that a sad thought?
It is. But term life insurance, in some scenarios, can be more beneficial to the family members and the insured themselves as opposed to acquiring whole life insurance. People who are sick, people who frequently get into accidents and people who’ve already reached their retirement are usually the ones who opt for term life insurance. They’ve come to terms with death. They know that their family will need support after they’re no longer there to provide for their loved ones.
How Do I Know I Need Term Life Insurance?
Some scenarios can be tricky to navigate. But these are the same scenarios that will help you decide if you need term life insurance. Here are some of them:
If you and your spouse have co-signed a mortgage lasting for over 15 years—the primary signatory will need life insurance to ensure that the other partner isn’t burdened with mortgage if they die.
Acquiring whole life insurance in this scenario would mean paying high premiums for the rest of your life, even after you’ve paid the mortgage. Alternatively, you can acquire term life insurance to protect your spouse from crippling debt when you pass away.
You can acquire term life insurance only for the years that your mortgage is going to last. The policy comes with a death benefit; the money will be used to pay off the remaining mortgage while the rest of it will be transferred to the surviving partner. The insurance and mortgage automatically settle down if you manage to outlive the specified time period. At this point, the mortgage will also be paid off, which means your spouse will no longer need coverage.
Your kid is in college. This is perhaps the stage where it’s the most expensive to raise a child. Not only do you want to pay their tuition fee, but you also have to keep them away from crippling student loans.
But it’s not always easy to avoid student loans. When you co-sign your child’s student loans, you’re taking liability for being responsible for it. However, if you die without a life insurance policy, the loans will fall on your kid—who can’t possibly pay it back on their own.
Acquiring a term life insurance to match the deadline of these student loans will help in protecting your child from paying these loans all by themselves. It will also save you from paying hefty premiums for whole life insurance.
If you take out a loan to start your own business, you need a life insurance policy. If you die before having paid off the loan, your spouse will be responsible for paying them off.
But whole life insurance might not be beneficial for your spouse for a short-term loan. You need to acquire a term life insurance to protect your spouse from short-term loans. You also need to match it with the number of years it’ll take to pay off that loan.
If you’re looking for a reliable insurance broker in Florida, get in touch with us at IFG Insurance Brokerage. We offer several other services including second to die insurance, whole life insurance and mortgage life insurance. Visit our website to learn more about our services!