For young healthy adults, death isn’t typically a big concern. But life happens, and unfortunately many of those young healthy adults die with nothing to protect those they’ve left behind. Term life insurance is one of the most effective ways to protect against those accidents. It’s designed to protect your income so that those you leave behind aren’t struggling financially. It can even be used to cover a particular debt, such as a mortgage. Here are a few tips on how to build the term life insurance policy that will best protect your loved ones.
Your Desired Term
The “term” referred to in a term life insurance policy is a period of time in which the coverage is offered. There are costs and benefits to each, so it’s important to choose wisely and according to your needs. Term life insurance can usually cover you for ten, twenty, or thirty years. One of the best benefits to term life insurance is that your premium is locked in for the entirety of that term.It’s important to note, however, that if you do not die within the designated term, your coverage ends and the policy will have to be renewed in order to keep the coverage. This can be problematic for some, because a life insurance renewal will always result in an increase in premium, meaning that if you choose a ten year term and live for another thirty years, you could likely end up paying more in premium over that time than you would have with a thirty year term.
Your Death Benefit
The death benefit is the amount that will be paid to your designated beneficiary at the time of your death. This amount should not be an arbitrary number. It’s important to make the proper calculations to ensure that your loved ones will be protected. This depends on your age, but it’s usually recommended that your death benefit equals about 8-10 years’ worth of your income if you don’t have any savings or investments.
Choosing a beneficiary is not always as simple as it sounds. Most people choose their spouse, or a combination of their spouse and children if they have them. It’s important to note that a beneficiary should be someone with insurable interest in your life, which in some cases could even include a business partner. There is also the option of a secondary beneficiary, which would come into play in the event that both you and your primary beneficiary die.
It’s important to note that your health will be an important factor in determining your premium. Term life insurance quotes are based on the likelihood of the insured person dying. Therefore, if you are in poor health, your likelihood of dying is higher, which increases your liability. The reverse is true as well. Persons with exceptional health are given the most affordable premiums.
A term life insurance policy is a great way to secure the future of your loved ones. Follow the above steps and you’ll be sure to have peace of mind.