Term life insurance
Benefits of term life insurance
In addition to its affordability, term life insurance offers flexibility that you can’t find in permanent life insurance. Eventually, you’ll ideally save enough money to be able to support your loved ones and cover end-of-life expenses without the help of an insurance policy, or your dependents will no longer rely on you financially.
With term life insurance, the ability to choose your term length and coverage amount means you pay only for the insurance you need and only for as long as you need it. It’s also possible to purchase multiple policies so you can even keep separate insurance policies if, for example, you need a 30-year policy to protect your family and a 10-year policy to protect against a business loan.
And, because term life insurance doesn’t come with an additional investment-like component like permanent life insurance does, term provides the most important function of life insurance — financial protection — without additional, complex features to manage.
How much term life insurance do you need?
The amount of coverage a term life insurance policy provides affects your final premiums. You want to keep the policy affordable (there’s no point in buying a policy that you can’t sustain) while still providing enough for your family’s financial needs.
When deciding how much term life insurance you need, you should take into account:
- Outstanding debt, like a mortgage
- Future education costs, for you or your children
- Dependents, including children and aging parents
- End-of-life expenses for yourself
- Any financial cushion your family might need
In general, your term life insurance policy should last as long as your longest debt (such as a mortgage) and should cover any remaining costs when you subtract your debts from your existing assets.