Is Term Life Insurance the Right Choice for You?

Life insurance has a reputation for being complicated, but it doesn’t have to be. Term life insurance is fairly simple, for instance, and it’s the most common type of life insurance sold. In fact, even employer-sponsored life insurance plans are a type of term insurance in most cases.

Life insurance’s bad rap for being difficult to understand is part of the reason that only about half of adults have coverage. Another big reason may be that people expect life insurance to be expensive. The good news is that in many cases, coverage may be more affordable than you expect.
Term life insurance does what it says on the tin. The policy provides life insurance at a guaranteed premium for a fixed amount of time, called a term. For example, you can purchase a 20-year term policy, the most popular term length, and that policy offers a fixed premium for the 20-year coverage period, which you can pay monthly to keep costs affordable.

After the term expires, you can often renew the policy, although the insurer can’t guarantee the premium cost after the term period. 
Policies with longer terms often come with higher premiums. The reason for this is because by extending your coverage further into the future, the risk of death increases. Whether due to accidental causes or due to a health condition, risks rise as more time passes and as we grow older. 

While term policies have their limitations in regard to coverage length (at a guaranteed premium), the term can also match up well with life’s financial obligations. For example, you can choose a 30-year term if you just signed a 30-year mortgage on a home. Or you might choose a 20-year term policy if a new family member just arrived in the hospital delivery room. Some people even buy a 5-year term policy to coincide with a car loan or a newly formed business. 

Term life policies have a lot to offer to most households, but they may not be the perfect choice for every need. Some situations may be better served by a whole life policy or even a universal life insurance policy. While each type of policy serves different coverage goals, they have two things in common. Each type of policy is designed to protect your family and each policy type is most affordable when you’re younger. 

​If you’re thinking about buying coverage, don’t wait until next year. You can lock in a lower rate by buying sooner rather than later.