Term life insurance is a great tool when properly used, but like most financial instruments, one size does not fit all.
It is important to understand when and how to use term life insurance in order to obtain the best results.
Use these tips to determine if term life insurance makes financial sense for your situation.
Term Life Defined
Term life insurance is a policy that covers a specific period of time, typically from one to 30 years. In the event of your death, the face value of the policy would be paid to your estate or designated beneficiary. At the end of the allotted time, the policy provides zero coverage and no residual benefit.
The Good and Bad of Term Life
In most instances, term life insurance is substantially less costly than whole life insurance or other alternatives. However, the longer the duration of coverage, the less significant the savings due to the residual value of whole life.
Who Benefits?
Term life insurance is an exceptionally valuable tool for young adults or those just starting a family.
Because earned income is often moderate during the early years of marriage, college or young adulthood, the lower up-front cost of term life provides the protection you need without the high price.
In the event of the death of a spouse, term life insurance could provide the means to ensure valuable financial assistance required to replace an income.
It could also be used to pay off a mortgage or put children through college.
Term life insurance is also valuable for those seeking an additional layer of coverage to supplement a whole life policy during a transitional stage in life planning.
For example, many older adults purchase an additional term life policy while paying college tuition for adult children or other specific situations.
Call if you want to get your questions answered: 925-365-3200
Take Care,
Orlando Frasca
www.risdirect.com
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