Term Insurance: Is It The Right Life Insurance Strategy for You?

What’s your most valuable asset? Your home? Your investments? A collection of valuable cars or art? If you’re like many people, it’s none of the above. Your most valuable asset may very well be your ability to generate income and financially provide for your family.

One of the most basic steps in any financial plan is making sure you have tools in place to protect that valuable asset. That protection often comes in the form of insurance. If you pass away and are unable to provide for your family and loved ones, life insurance can help fill the financial void. Your loved ones can then use your life insurance death benefit to pay debt and fund their living expenses.

If you need additional life insurance coverage, you may be unsure of which type is right for you. There are several different kinds of life insurance, and each comes with its own set of benefits and considerations.

One of the most commonly used types of life insurance is a product called term insurance. It’s popular because of its affordability and because it can be used to cover specific needs. If you’re considering adding life insurance protection, you may want to review term insurance as a possibility.

What is term insurance?

Term life insurance is a coverage that lasts only for a specific period of time. That period is usually measured in years. For instance, you may find term policies that cover as many as 40 years or as few as 10.

Why would someone want temporary life insurance coverage? Because they may have a temporary need. For example, assume you buy a home and need life insurance to cover the mortgage in the event you pass away. If you have a 30-year mortgage, you may only want life insurance that covers that 30-year period.

Similarly, many people choose term insurance when they have children. They need some kind of coverage to financially support the children. However, at some point, the children will grow up, become independent and no longer rely on their parents for support. When that happens, the parents may not need as much life insurance. In that case, a term policy could make sense.

Pros and Cons to Term Insurance

One of the attractive features of term insurance is it is often far less expensive than permanent insurance. That allows many people to get a significant amount of coverage for a reasonable premium amount.

However, the downside is the policy does expire at some point. You may find when the policy does expire, you no longer qualify for new insurance at an affordable premium. Some term policies will allow you to convert the term insurance into permanent coverage, although you will likely see an increase in premium when you do that.

While term insurance is a popular strategy, it’s not right for everyone. It’s very possible you may be better served by a permanent life insurance policy. Consult with your financial professional to review your needs and identify the best policy for you. He or she can help you find the best solution to protect one of your family’s most valuable assets - you.


This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
​
15526 - 2016/3/30