The Simplest Life Insurance
Understanding Term Life Insurance
This type of insurance protects you for a specific time period ranging from 10 to 40 years. This set period is known as a “Term.” If you pass away during the specified term, your beneficiaries receive a tax-free benefit. Term life is the lowest cost life insurance plan relative to coverage.
Term Life Insurance is the simplest, most affordable, and best-known type of life insurance.
Term Life Insurance protects against the financial impact of a person’s death by paying tax-free cash to one or more beneficiaries.
Once you understand your value to those you love, term life insurance should be the first type of policy you buy, as it is the most reasonably priced option available.
If you eventually decide to keep your life insurance coverage for a longer period, most term life insurance includes options to convert the policy into a permanent form of coverage such as Whole Life or Universal Life coverage.
Term Life Insurance offers temporary protection, for a specified coverage period. There are many different term lengths, but the most popular ones are 10 or 20 years. The coverage amount for most Term Life Insurance policies does not decrease, unless you choose to. The insurance benefit is only paid out if the insured dies within the coverage period of the Term Life Insurance contract.
The coverage amount you select is partially based on current obligations that you would like to see paid off in event of your death. This could include paying off the mortgage and other debts, setting aside funds to secure your dreams such as children’s post-secondary education, final expenses and probate/executor fees. In most cases, the larger need is to replace the many years of income that is lost to the family when a bread-winner dies.
The cost (referred to as the “premium”) is based on coverage amount selected, age, medical history, smoking status, current health and possible risks as a result of a person’s lifestyle.
Who should consider Term Life Insurance?
- Term life insurance is ideal for young adults and families. Both marriage and children create new financial obligations that must be protected.
- If someone is depending on your income, life insurance is important to protect that future income.
- Term life insurance is ideal for people who have debts, loans, and mortgages to cover.
When should you buy Term Life Insurance?
- When you become aware of the need for life insurance.
- While you are still healthy, you can secure your coverage and protect against the risk of health changes that could result in you becoming uninsurable or being subject to expensive extra charges due to adverse health or other risks to your life expectancy.
- When you are younger, your life insurance premiums are lower for two reasons:
- The older we get, the closer we are to our eventual death.
- Age brings on increasing risks of developing health problems that get expensive or impossible to insure.
What Term Life Insurance can do if something happens to you
- Term Life can pay off your mortgage. Having independent insurance is far superior to the mortgage insurance offered by banks, as their insurance is designed to protect only the bank while your insurance is designed to protect your loved ones.
- Term Life can replace your income so that your family can achieve all the goals you set together. And it can secure the best options for your children’s post-secondary education.
Considerations if you own a business
- If you’re a business owner, Term Life Insurance can provide funding so that the remaining shareholders can buy the shares from your surviving family.
- “Key Person” Term Life insurance can protect your business from the loss of a key employee.
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