Insurance World

We all know that one of the perks of purchasing a term life insurance policy, aside from the fact that it is usually cheaper than purchasing a whole life insurance policy, is that we can choose how long we want the term life insurance policy to be in effect. We get to choose when the term life insurance policy expires, and generally we can choose for our term life insurance policies to last anywhere between one year and thirty years.

If we have such flexibility choosing the length of our term life insurance policies, why should we consider choosing a 30-year term life insurance policy? Well, there is a reason you are interested in purchasing a term life insurance policy in the first place. Maybe you like the flexibility of term life insurance policies; maybe you like the affordability. Maybe you only need life insurance for a certain number of years due to an illness or some kind of debilitating health condition. Maybe you just like the fact that with a term life insurance policy, you know that you are not subject to a “forced savings component” that comes with whole life insurance policies. In any event, you want a term life insurance policy, and by purchasing a 30-year term life insurance policy, you can rest assured knowing that you are going to be covered for the next 30 years.

It’s true that there is no cash value that accumulates with a 30-year term life insurance policy; however, at the end of the 30 years, you can renew your term life insurance policy even if you do not have evidence of insurability – your premiums may increase annually, but you can renew it.

Purchasing some kind of life insurance policy, whether it be a term life insurance policy or a whole life insurance policy, is a responsible decision to make; one that will be beneficial to both you, and your family.

As we work our way through life, time and experience answer a lot of questions, yet somehow, a few linger – such as life insurance. For many people, life insurance remains one of the enduring mysteries of adulthood: Do I really need it? How much? What kind? Who should I get it from?

“Determining how much life insurance you really need, and what kind is best for you, doesn’t have to be complicated,” says Patty Reiners, assistant vice president of marketing for Ameritas Direct, a division of Ameritas Life Insurance Corp. “You can begin by asking yourself some basic questions.”

* If I die tomorrow, will my life insurance cover my family’s debts?

“First, the amount your family receives must at least be adequate to pay off your personal debts such as credit cards, mortgages, student loans, etc., so you don’t leave them in a hole financially” says Reiners. “Totaling up those debts gives you a starting point to determine the most basic level of death benefit amount your family will need.”

* Will my life insurance protect my survivors’ current standard of living?

“Will your family be able to maintain their current lifestyle – stay in your house, keep kids in school, or your spouse at home?” Reiners says. “This can include extras like vacations or anything you think is important that they not have to give up for financial reasons. If your surviving spouse will likely be retired, look at your existing sources of retirement income and consider how much death benefit may be needed to bridge the gap between income and expenses.”

* What will my children need?

“Next, if you have children still at home, consider how much additional money they will need to get them to a successful adulthood,” Reiners advises. “Special opportunities such as club sports, camps, school and travel opportunities take money. Funding for extra education activities, trade school, college or even graduate school needs to be taken into account. Whatever your goals or plans for your children, they will require money to make them realities if you’re not there to fund them.”

* Do I have any special considerations?

Are you currently taking care of an elderly parent or a child with special needs? Your life insurance can help ensure they continue to be cared for if something happens to you. Do you own a business that you would like to see continue to operate? Life insurance can provide a buffer or financial support during the transfer and learning curve of new leadership. Is there a charity or organization that relies on you for support?

*What kind of life insurance should I look at?

There are two basic types of insurance to help you meet your needs: term and permanent. “Term is the most common,” Reiners says. “Term policies offer lower annual premiums, and a definitive cost for the amount of coverage.”

“Term can be right for people who want coverage for a very defined need or time frame,” Reiners says. “It’s a good choice for people with limited resources but who want to ensure income replacement. Plus, most term policies can be changed to permanent insurance at any time the policy is in effect.”

“With permanent insurance, you pay more than is needed to cover the cost of the policy. The extra builds up as cash value,” Reiners advises. “The cash value can provide flexibility, emergency cash, extra income, and can grow tax-deferred.”