Financial security with term life insurance isn't just a dream; it’s a reality that is waiting for you! Life is a rollercoaster of surprises, but with a solid financial plan that includes Term Life Insurance, you can achieve the peace of mind you've always wanted.
This blog post explains what term life insurance is, what it covers, and why you need it.
What Is Term Life Insurance
Term life insurance is like a financial safety net, providing a specified level of coverage for a predetermined period. Just as the name implies, it comes with a term, typically T10 (10 years), T20 (20 years), or T30 (30 years). During this term, you pay a fixed premium, and if you pass away while the policy is in effect, your beneficiary receives a benefit payment.
Your age when you buy the policy significantly influences your premium. Starting early is best since premiums increase as you get older. Term life insurance offers flexibility that allows you to align the policy term with life stages, ensuring that renewal doesn't coincide with periods of higher financial obligations.
Imagine locking in your costs for a set period! Unlike the variable nature of home or auto insurance, which can increase annually, term life insurance provides a fixed premium, so you know exactly how much to budget. It is one of the few products that offer a comforting sense of financial predictability in an otherwise uncertain world.
Term Life Insurance with Added Benefits
Beyond basic term life insurance, there's an option to add a valuable component - guaranteed cash value. It's not an investment, but it acts as a financial cushion. As your policy accumulates cash value over time, you can use it to cover premiums, reducing the risk of policy lapses.
Policy lapses can be a worry, especially for individuals in their 70s who might miss premium payments. Missed payments can cause their coverage to lapse, leading to the loss of a policy they've maintained for years. Requalifying for the same coverage at an older age will be considerably more expensive.
What Does Term Life Insurance Cover
Term life insurance ensures a lump sum payout to your beneficiaries if you pass away while the policy is in effect. The proceeds from term life insurance can be used for any purpose, including income replacement, daily expenses, mortgage payments, and future costs like post-secondary education.
For those considering mortgage coverage, it's important to note that mortgage-specific insurance is an option, but it is limiting. Mortgage insurance decreases as you pay off your mortgage and isn't portable. In contrast, term life insurance offers a predetermined benefit payment that doesn’t decrease over time and can be transferred to your next home.
Common Misconceptions About Life Insurance
I often hear people say, “I don’t believe in life insurance". In reality, they resist life insurance not because they doubt its value but because they believe it's costly. The key is education - people often fail to grasp the importance of life insurance because it hasn't been properly explained to them.
"I don't believe in life insurance" certainly doesn't hold true anytime I have passed a cheque to a policy beneficiary!
Who Should Buy Term Life Insurance
Term life insurance is an excellent choice for people who have financial responsibilities that would burden loved ones if they passed away.
The suitability of term insurance varies based on your age and financial resources. If you're seeking a more permanent solution, there are other options to explore.
Learn About Term Life Insurance
To learn about term life insurance, research credible sources, such as our tools and resources section. Consider having a conversation with a licensed advisor. They can provide personalized recommendations and pricing without any obligation or pressure, ensuring you have all the information you need to make an informed decision.
Term life insurance is a powerful tool for securing your financial future and providing for your loved ones. Don't let life's uncertainties catch you off guard - take the time to explore your options and make an informed decision to protect your family's future.