It’s easy to avoid thinking about life insurance, but it’s something that everyone should look into. Far too many people go without life insurance even though they can afford it, thus leaving their families in debt when they pass away.

Term life insurance is the most popular type of life insurance, and it’s the best financial option for most families. If you have dependents who will be financially impacted if you pass away, you should consider buying a term life insurance policy for security and peace of mind.

Life Insurance Life Insurance Providers Term Life Insurance Why Get Term Life Insurance

What Is Term Life Insurance?

Term life insurance is a type of life insurance that guarantees a death benefit if the policyholder passes away during a specified term. Once this term comes to an end, you can either renew your policy for another term or allow the policy to expire.

In the event that the policyholder passes away, the death benefit is paid as a lump sum to the beneficiary. The money can cover funeral expenses, medical bills, lost income from the deceased policyholder, or any other costs.

Premium costs vary depending on the policyholder’s age, gender, and overall health. The average annual rate for a 20-year term policy for a person in their 30s is $140 to $150. For a person in their 40s, the average rate increases to about $200 per year. These rates are for a policy of $250,000.

There are several types of term life insurance.

The most common is level term insurance, which usually provides coverage for a specified term between 10 and 30 years. The premium and the death benefit are fixed, so you’ll always know how much you’re paying and how much your beneficiary will receive if you pass away. However, the insurance company takes into account the fact that the risk of the insured person passing away increases over time. Therefore, your premium for a level term policy might be higher from the beginning than it is for other types of life insurance.

Yearly renewable term policies do not cover a specific term, but you can renew them every year without having to be re-evaluated for eligibility. Most policies offer a renewal guarantee of 10 to 30 years. When you first get a renewable term policy, the premium will likely be very cheap, but it will increase over time.

Return of premium life insurance guarantees a refund of your premiums if you are still living when the term ends. These policies are usually more expensive than other types of term insurance, but because you have the possibility of getting your premium back, your money won’t go to waste.

Another type of term life insurance is a decreasing term policy. With this insurance, the death benefit decreases each year based on a predetermined schedule, but the premium stays the same for the duration of the term. Because the death benefit decreases as the risk of death increases, the premiums are typically cheaper than the premiums for level term insurance.

Modified term life insurance uses a different payment structure than other types of term insurance, but the coverage is the same. Premiums may increase each year, or the death benefit may decrease over time. With modified term life insurance, it’s especially important to choose carefully and make sure the policy is a good fit for your current and expected future finances.

Which Factors Influence Premiums?

The major factors that determine your life insurance premium include your age, your gender, and your overall health. Younger people are at a much lower risk of passing away than older people, so premiums for policyholders in their 20s and 30s are usually cheaper than premiums for people in their 40s, 50s, and 60s.

On average, women live about five years longer than men. This means that there’s a lower risk each year of the insurance company needing to pay out a death benefit for a female policyholder than there is for a male policyholder. Therefore, women usually have slightly lower life insurance premiums than men.

Your health status, lifestyle, and life expectancy also affect your premium. Smokers almost always pay higher premiums because they’re at an increased risk of a wide variety of health issues. Other health factors that influence your insurance rates include the following:

  1. Weight
  2. Blood pressure
  3. Cholesterol
  4. Alcohol consumption
  5. Previous health conditions
  6. Family medical history

People with dangerous jobs or hobbies usually pay higher premiums, too. For example, someone who works as a logger and goes rock climbing for fun will pay more for life insurance than someone who works in an office.

Reasons to Get Term Life Insurance

Term life insurance is inexpensive

Term life insurance is usually much cheaper than whole life insurance, especially if you’re young. Whole life insurance includes a savings component, but term life insurance only offers a death benefit. Therefore, premiums are more affordable.

You can choose a term length to match your needs

Most insurance companies offer term policies for anywhere from five to 30 years. You can select your term based on your age, your financial situation, and your expectations for the future. For example, if you have young children, you may choose a 20-year policy, which will provide financial security for your family while your kids grow up. If you pass away during the term, your family will have financial assistance for child care, college funds, and other expenses.

You can convert term life insurance to a permanent policy

If you’re not sure whether you should get term life insurance or whole life insurance, you can choose a term policy that can be converted. Most insurance companies will allow you to convert your term policy to a permanent policy if you decide that permanent life insurance is the better option.

Life insurance provides peace of mind

When you have life insurance, you’ll know that your family will be covered if you pass away. With the benefit, they’ll be able to pay for any unexpected expenses from your death, so they won’t have to worry about finances while they grieve. The remaining money can cover the mortgage, debts, college tuition, or any other expenses your family faces. This peace of mind for yourself and your family is priceless.

Anyone can benefit from term life insurance. Policies are usually inexpensive, especially if you’re young and in good health. You shouldn’t rush into a decision with life insurance, though. Different insurance companies will offer different rates, so it’s important to shop around for the best option. With some careful planning and research, you can find an affordable life insurance policy that will provide financial security for you and your family.