What are the Advantages of Term Life Insurance?

The first advantage of term life insurance is the cost when a policy is taken out at a young age. For a very low price, a young adult can provide financial security for their family during a time that is taxing on a budget. As necessary as insurance is, some people would not be able to afford coverage if not for term life policies.

Options in Term Life

There are varying policies that offer flexibility in insurance coverage based on the needs of the individual. Select Term is a basic choice of 10, 20, or 30 year coverage terms at a set premium amount for the duration.

The policy can be renewed at the term end up until age 95. It can be converted to a permanent policy in most cases regardless of the health of the insured. After the selected term of coverage, premiums generally will increase each year.

Under the terms of a Return of Premium policy, the insured chooses 20 or 30 years of life coverage. Upon the completion of the term, all premium payments are returned to the insured, so it costs nothing when the person outlives the policy period. In essence, the policy is like a loan to the insurance company, who uses the money for the time period but offers protection during that time.

Mortgage life coverage is often for 15 to 30 years, and it is specifically designed to pay off the home mortgage in the event of an untimely death. The benefits decrease after 5 years the same as the payoff of the mortgage.

What is the Purpose of Term Life Insurance?

Term life insurance is seen as a way to protect a spouse from losing a home in the event the major wage earner is out of the picture. The amount of coverage can be fixed to large enough figures to cover the cost of the home or can be earmarked to pay a specific amount on the remaining principal.

Children's college education is another reason for term life insurance coverage. Without a father's income contribution, higher education might not be possible without term life insurance, and short-term debts might not be met either for automobiles to transport kids to and from college.

The initial reason for term best life insurance policy was to provide a necessary life protection for those who could not afford to pay the higher premiums of other coverage types. This remains true today for many young couples and even those approaching middle age; the advantage of term life insurance is it offers coverage options for many that might not otherwise be able to obtain life insurance.