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Term Life Insurance Benefits

Term Life insurance is the simplest to obtain and most affordable type of life insurance. Term Life insurance is a benefit only type of life insurance policy. In other words, it has no cash value or investment component, as do the various types of Permanent Life insurance.

Key Points

  • Term Life insurance is purchased for a fixed period of time usually 5,10, 20 or 30 years
  • Term Life insurance is more affordable the earlier you purchase it
  • Term Life insurance has no cash value
  • You should purchase enough Term Life insurance to cover 10x your annual salary for at least 7 years, 10 Years if you have children.

How Long A Term?

Good question. You may think you need life insurance for your entire life, however that is not really true. That is why Term Life insurance is available in so many optional terms. So what is the ideal term? Like most things in insurance, the answer has very much to do with your life circumstances. When deciding on the term for a Term Life insurance policy the first thing to consider is how long do you expect your family members to be dependent on you? So lets say your kids are 3 and 5, you'd want at least a 20 year policy that covers them both until they are at least 23 and reasonably expected to be on their own. But what if you want to make sure your spouse is covered at least as long as if you lived to be retirement age. In that case, if you are 35 now, that would mean a 30-year term, to take her to when you'd be 65, and so on and so on. Just keep in mind that the older you are when you start your term the more expensive your premiums will be.

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