Affordable Life Insurance

For many, the major consideration for any big purchase is affordability. Shopping for life insurance is no different. Making financial decisions is important, but being able to afford protection for your family is critical. One of the most affordable options is a term life insurance policy.

BENEFITS OF TERM LIFE INSURANCE

Compared to permanent life insurance, a term policy is considerably less expensive because you pay premiums for a shorter amount of time. A permanent policy, on the other hand, costs more because the premiums are spread over the life of the policy.

Even though a term policy is just for a specified period of time, it is renewable at the end of the term and often can be converted into permanent insurance when you are more able to afford the higher premiums.

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TERM LIFE INSURANCE CASH VALUE

While permanent life insurance policies offer an additional “cash value” that accumulates over the life of the policy, you can still grow additional value with a term life policy by also investing in a mutual fund. In many cases, depending on the amount you invest, you may end up with more money than would grow in a permanent policy.

TERM LIFE COVERAGE TO REACH GOALS

Since term insurance is for a specific “term” (from one year to 30 years), it is well suited for short term goals – paying off a mortgage or providing college savings, for example.

DRAWBACKS OF TERM LIFE INSURANCE PLANS

While a term life insurance policy provides affordable premium rates, if you elect to renew your policy, the premiums will increase at renewal. It still will cost significantly less than a permanent life policy, but be aware that the premiums will not stay at the same rate when you renew.

Compared to permanent life insurance, a term policy strictly provides coverage and does not grow any cash value. The payout for a term policy is only received if you die during the term. If you survive the policy, there is no benefit received.

TERM LIFE INSURANCE PREMIUMS

As previously mentioned, the premiums for a term life insurance policy are much less than other types of insurance. The following chart is from the My Life Insured website, and provides an excellent comparison of term life and permanent life premiums for a male, “preferred non-smoker” classification at various ages.