What is Term Life Insurance? Quick & Easy Fundamentals

Written by Terumi Davis

What is Term Life Insurance

Do you wonder if purchasing a life insurance policy is right for you? Well, if other people depend on you, it is essential that you have a life insurance policy.

The next question you are probably thinking is what is term life insurance? Glad you asked. This article will give you a quick and easy rundown.

If you are not around to take care of your family, a life insurance policy will give your loved ones immense security knowing that they will be taken care of financially.

What is Term Life Insurance?

Term life insurance is the most simple type of life insurance and best of all, the most affordable. When you purchase a term policy what you get is just pure insurance, that's it, nothing else. If you die, the insurance company pays out an amount of money to those that you left behind.

Bottom line is that term insurance will protect your family from financial distress for a specific time period, if you were to unexpectedly pass away. Due to this fixed period of time, this is why term insurance is considered a temporary policy. After your specific time period expires, you can just drop the policy or you can renew the policy.

If you choose to renew your policy, be aware that the premium will increase since the renewal term will be based on your age at the time of renewal.

How affordable is it?

Term life insurance is a perfect choice for families on a budget or young couples since it's very affordable.

Check out these monthly rates!

Emily is 30 years old and a non-smoker who is in excellent health. She is married to Frank, and they have two kids.

15 years

20 years

25 years

30 years

$100,000

$7.70

$8.56

$9.98

$10.50

$250,000

$9.54

$11.16

$15.26

$16.84

$500,000

$14.00

$17.06

$24.03

$27.56

Emily decided to purchase a $500,000 term life policy for 30 years and pays $27.56 a month. That's less than a trip to the manicure salon!

She now has that peace of mind knowing that her family's financial future is rock solid if she were to pass away.

Her kids can attend college without worrying about how the tuition will get paid. Frank can stay in the family home since the mortgage will be paid from the proceeds of the life insurance policy.

If she didn't take the initiative to purchase a term life policy and she was to die unexpectedly, it would be a tough financial burden for Frank and her kids.

How long is it for?

You choose how long you need the policy for (term length) based on your family's needs:

  • 10 years
  • 15 years
  • 20 years
  • 25 years
  • 30 years

20 years is the most popular term length since it's very affordable.

Keep in mind that if you purchase a level term policy, the price you pay for the policy is locked in. It will never change for the duration of the term that you choose even if you health declines during the term period.

CURIOUS TO KNOW HOW MUCH IT WILL COST YOU?

If you would like to know how affordable a term life policy is for you and your family, give me a call at 800-876-9016.

If you prefer, just send an email to terumi@tdlinsurancegroup.com and I'll be happy to give you a customized quote.

What does face value mean?

When an insurance company mentions face value it is referring to your death benefit. This will be the amount of money that will be paid to those you left behind when you pass away.

For example, if you have a face value of $175,000, then the insurance company will pay $175,000 as the death benefit to the beneficiary that you have chosen.

It is important to note that death benefit proceeds are tax-free. Can you believe it? NO TAXES are due on the death benefit.

What does beneficiary mean?

This will be the person or individuals that you choose to receive the proceeds of the death benefit. Sometimes the beneficiary can be a business entity, a family trust or a non-profit organization.

There are even people who make their pets as their beneficiary, no joke! I remember reading a story that the Leona Helmsley also known as the Queen of Mean left part of her multi-billion dollar estate to her dog named Trouble. Now that was one rich dog!

How is the premium calculated?

Insurance companies calculate your premium payment based on your health classification, gender, and age. Your health class is determined by your health, medical history, and your lifestyle. Do you smoke or are you involved in a high-risk sport such as hang gliding? If so, your premiums will be higher because of these factors.

Not all insurance companies have the same rates because each company has its own unique standards and guidelines. This is why it is beneficial for you to seek the guidance of an independent insurance agent who can secure the best insurance rate for you based on your unique situation.

What can my survivors do with the death benefit proceeds?

Knowing that your family will be well taken care of financially after your passing will ease the monetary burden your family will encounter. They have the freedom to choose how they spend the proceeds. It can be used to pay for any funeral expenses, medical bills, outstanding debts, the monthly mortgage or rent, everyday living expenses or funding college tuition.

What's next?

I hope I have answered any questions you had about what is term life insurance. If you love and care about your family, it is vital for their financial well-being for you to be covered by a life insurance policy.

If you were to die unexpectedly, it will be emotionally challenging to deal with the fact that you will not be there physically to share in their lives. However, by taking the step in providing a solid financial plan for their future, it will be comforting to know that they will still continue to thrive.

Feel free to fill out the quote form and you will instantly be able to compare rates. Call me at 800-876-9016  or email me at Terumi@tdlinsurancegroup.com to start securing your family's financial future today.

 

 

About TDL Insurance Group
About TDL Insurance Group

We work with individuals across the nation to secure the best life insurance rates.

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