Term life insurance is perhaps the simplest (and most convenient) form of life insurance. In exchange for a monthly cost, you will get coverage that pays your beneficiaries in the case of your death.
Term life insurance is the most popular type of life insurance. Here are a few reasons why term life insurance is so popular.
Prefer the convenience of online quoting and applying? There are many carriers, like Ethos, Sproutt, Bestow and more, that offer exactly that.
Don't want to deal with agents calling you? Term life is the most popular agentless life insurance type out there.
Who likes going to the doctor to get their blood taken? This isn't something you need to worry about with a no medical exam term life insurance policy.
All this convenience has to be expensive, right? Wrong! Term life insurance is the most affordable life insurance type available.
The only two things you need to know before you buy term life, is how much coverage you want, and for how long. After all, term life insurance only covers you for a predefined term, or duration.
How much coverage do you need? It's a tough question. Unlike your car or home, your life has no set value. So it's important to take a moment and think about this number.
Do you want your life insurance policy to act as income replacement for your loved ones? If so, calculate how much your monthly bills are. Then multiply that number by 12, and then x amount of years you want to provide for. Then think about paying off your home, loans, education for children, and so forth, to determine how much coverage you need.
As previously mentioned, term life insurance only insures you for a predefined duration. This allows term life insurance to be much more affordable than whole life insurance. The cost for whole life insurance about 4 times that of term, or more.
The most common terms available are 10, 20 and 30-year. Some carriers offer unique terms, like 2-year, or even 40-year.
Don't underestimate the term
We believe it's better to overestimate than underestimate when it comes to term. It's true that a shorter term costs less, but what if in 10 years the need for your life insurance policy hasn't changed? Your only choice then is to get a new policy (at a much higher cost, since you are now 10 years older), or to try and extend your policy.
If you overestimate, and your needs change just a few years down the line, you can simply let the policy lapse (by not paying for the policy, it will come to an end automatically).
III.org concluded that Americans consistently overestimate the cost of term life coverage. Half the population estimate the cost of life insurance at more than three-times the actual cost.
Realistically, if you are looking for the cheapest life insurance option, term life insurance is your best option.
If you don't mind spending more money on a life insurance solution that lasts your entire life, and builds cash value, universal life insurance is an ideal solution.
