Let's
talk a little about the term life
insurance plans so we can understand what exactly we are comparing
from a layman's point of view.
The
term life insurance carriers have many
fancy names (with lots of "Opti" and
versions of "Secure" mixed into the
names) but term insurance is pretty
simple at its core which is a big source
of its popularity. First, what is
"term" and how is it different from
"whole life"? Term life insurance
basically means you are providing life
insurance protection for a fixed period
of time. You are locking in a rate
or premium based on your age at the time
of enrollment during that period of time
but the coverage will typically not be
allowed to renew after the term has
completed. This period of time is
usually reflected directly in the name
of the life insurance plan and typically
runs in 5 year increments such as 5, 10,
15, 20, 25, or 30 years. The
larger the term, the more expensive per
dollar of coverage. All things
being equal, 20 years of $100,000
coverage will be more expensive than 10
years of coverage. This makes
sense since the carrier is taking on
more risk with a larger period of time.
How
long do you need the term coverage for?
Usually, term is purchased to offset
future financial responsibilities.
For example, it may replace lost income
till younger children graduate from
college. Term life insurance is a
popular option for young adults just
starting their families for this very
reason. It could also be used to
pay off a mortgage on a primary
residence.
The
other major option when comparing term
life insurance plans is of course the
amount of coverage. This is
typically the key decision along with
term length in order to provide the
correct amount of coverage. Our
Term
Life Planner
is a good place to
start. Essentially, you want to
estimate how much income would need to
be replaced over the desired term.
Inflation and interest come into play
but the replacement income is a good way
to approach the question of how much
term life you may need. This
annual income replacement multiplied by
the your desired period of time is a
baseline. Of course, the longer
term, the more you have to account for
inflation. It's smart to apply a
5% baseline inflation amount and the
Term Life Planner can help with this.
Term life is so inexpensive these days
that it makes sense to establish your
needed amount and go higher. The
difference in monthly costs can be a few
dollars for $100,000 of extra coverage.
Try different amounts in the
term life
insurance quoting engine to see what the
monthly difference in premium is.
When
you run your term life plan quote, you
will receive a list of different,
competitive plans to compare with each
other. We also provide the
life carrier company
ratings and financial strengths so you
can take this into account. Term
life is really a commodity these days
with the options being pretty
comparable. It's a question of
selecting the right term for your needs,
the correct amount of insurance
protection, and then weighing the
company strength versus monthly premium.
It's that simple! The carriers
offer various riders, which are special
options you can add to your policy for
additional premium. Our theory is
that we would rather maximize our
protection in terms of amount of
coverage and/or term with our available
premium dollar rather than add these
additional plan options. Of
course, this is your decision but our
guidance would be to max out the
term/amount to the fullest.
Now that you understand how the term
life insurance plans work, it's time to
run your instant quote!
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