Term life insurance rates are very low, so even people who are just starting their lives can afford it.
If someone is younger or just starting out, they may feel that they do not have to worry about life insurance for years to come. Additionally, people who are younger may be interested in insurance, but believe it is too expensive for them to be able to afford. However, if someone does not have life insurance, they could leave their family in a dire financial situation. Read also: Is Life Insurance for Babies Really Necessary?
Benefits of Term Life Insurance
There are a number of advantages to selecting term life insurance, including the ability for people to choose the length of the term, lower monthly premiums and letting people select higher payouts without dramatically raising the cost of the term life insurance rate. While this type of insurance is not for everyone, many young people and people who are looking to eventually self-insure find this type of insurance to be an excellent choice. This type of insurance allows even people with lower incomes to ensure that their families are provided for should anything happen to them.
Setting Your Term
While the majority of term life insurance policies last for 20 years, they can actually be set for a variety of lengths. Most people chose to set their terms in 10 year increments, and one of the advantages of term life insurance is that another policy can be created right after the first. This allows people more flexibility than a lot of other types of insurance policies.
Additionally, at the end of the term, people can chose to extend their terms annually without having to go through a medical exam to determine their term life insurance rate. That said, the premium is usually higher because it is based on the age of the insured, so most people chose to set another term or consider another type of life insurance at that point. Some policies also allow people to fold their term life insurance over to a whole life insurance policy at the expiration of their set term.
Low Monthly Premiums
In addition to being able to select the length of the term, many people chose this type of insurance policy because it has such a low premium associated with it. Since many of the people who chose term life insurance are younger and are far less likely to cause the insurance policy to be paid out, the monthly premiums are dramatically lower than most other type of insurance. Read also: Your Guide to Understanding Life Insurance Quotes for Young Adults.
This is why many young people, especially as they are starting families, chose this type of insurance. If one of the income earners in the family passes away, children and the surviving spouse are still taken care of. Additionally, these rates are far more financially achievable for people who are just starting their careers and have lower incomes.
Despite the fact that the monthly premiums for this type of insurance are far lower than most other policies, they offer people the ability to have a large pay out to their beneficiaries without radically increasing the cost of the insurance. While there is an increase in monthly premiums for people who chose larger benefit amounts, they do not rise as sharply as most other premiums do. Again, this goes back to the fact that the majority of people who chose this type of policy are young and in good health, meaning that the chance of the policy having to be paid out is low.
Things to Consider
While this is an excellent insurance plan for many people, term life insurance is not for everyone. To begin with, at the end of the term, none of the money paid on the policy is returned to the insured. Additionally, this type of policy is not a good choice for estate planning. Generally speaking, this type of policy is geared towards younger people who are best able to take advantage of lower rates. For people who are older, the better option is usually whole life insurance.
People who are young should absolutely look into this type of life insurance. It is extremely inexpensive, and most people who go online and calculate their term life insurance rates are surprised at how affordable they are. Term life insurance is one of the best ways for young people to ensure that their families are taken care of.
