What Is Term Life Insurance?
When you look online for reliable information about life insurance, it can be a time-consuming, hours-long search if you don't know the essential concepts.
Life insurance comes in two main varieties: term life insurance and whole life insurance. But each type comes with its pros and cons to consider before comparing insurance life companies and policies.
How is term life insurance distinct from whole life insurance? Do life insurance costs vary more with whole life coverage?
If so, what's the fastest way to find the best deals online?
You might have even more questions about life insurance, so the focus of this article is on term life insurance specifically – the more affordable type you can buy today.
What is term life insurance? The essential concepts
You should know that term life insurance is a policy that's only in effect for a particular time. That's why you need to keep paying the policy so the coverage doesn't expire, leaving you unprotected when you and your loved ones can least afford it.
The most significant benefit of term life insurance is low life insurance costs overall. Also, term life policies are simply more flexible in the number of options to choose from, which could lead to a much lower premium monthly if you search long enough.
Still, the confusion often stems from the fact that people don't take the time to compare term policies side-by-side. The price tag can range widely from insurer-to-insurer and policy-to-policy if you're not careful.
Typically, life insurance companies sell term life coverage in 5, 10, 20, or 30-year increments. Deciding which one works best for you depends on how much you want to pay for the coverage now and how much you need the policy to pay out after you pass away.
Since you may have limited finances, here's a little more information about the two main types of term life insurance: level and decreasing.
What's the difference between level and decreasing term life insurance?
Life insurance costs can benefit your budget if you pick the right plan. The trouble is that without a way to compare, you'll need to do it manually, visiting several sites at a time.
So if you do, indeed, have to search the long way, watch out for the terms level and decreasing.
Level-term life insurance is a policy that pays out beneficiaries the same amount as to whether the insured passes away in a few days or 30 years. This type is the most attractive if your loved ones will need the same income to maintain their way of life.
On the other hand, decreasing term life insurance is a policy that comes with a declining payout for the duration of the policy. It's most effective if you have a specific debt (i.e., a long or expensive mortgage) you need to account for after you die.
The main benefit of carrying a term life plan with decreasing benefits is the price, which can gradually go down over the years with the right life insurance company.
The challenge is deciding which type of term makes the most sense financially.
Why choose level term life insurance?
As previously stated, level-term life insurance coverage pays out the same amount of benefits even though the policy is in place for many years. These term life plans are also flexible if you want to spread out premium costs monthly or annually.
Generally, this type of insurance is most helpful if you can afford it and want to secure a steady income for your loved ones after you pass away.
But the catch is that one insurer may offer several different forms of level term life insurance. Not all term life insurance companies can provide the same rates for comparable insurance policies. In fact, rates can even vary from state to state.
When affordability is an issue, you can turn to a decreasing term life insurance policy from a quality carrier.
Why choose decreasing term life insurance?
In general, decreasing term life insurance policies are cheaper and more affordable for you at the end of the day. But there's a catch: carrying this type of term life coverage only makes sense in certain instances.
For example, as mentioned above, these insurance policies work well if you need to account for a specific debt after your passing. Most often, it's a mortgage that needs to be paid off before beneficiaries can genuinely be financially secure.
Let's take it a step further to clarify the difference between level life coverage.
If you need a decreasing policy to account for a mortgage, then by definition, you'll need the insurance less over time. If affordability is on the top of your mind, it makes no sense to keep paying high premiums when you don't have to pay for that kind of protection.
As an alternative, an insurance company could offer you a decreasing benefits policy to make their services seem more attractive. But it's up to you to make the best decisions for your loved one's financial well-being.
Paying a little more for insurance premiums now could provide much more peace of mind down the line when you ultimately pass away.
What else should you consider when comparing term life insurance policies?
One little-known benefit is the return of premiums with specific term life policies. It's a common point of confusion because not many types of insurance in general offer such a perk.
When you buy an auto policy or a homeowners policy, the price you pay for the premium is considered a fair price for the insurer to take on the risk; however, term life policies are different.
If you don't file a claim, some insurers will reimburse you for basic expenses if you've maintained the policy throughout its duration.
The main drawback to these term life policies is that they're more expensive than policies that don't reimburse premiums as a reward for good health.
What's the best way to compare prices between life insurance companies?
Shopping around the web for term life insurance doesn't have to be a chore if consumers go to LifePlans.com. You know first-hand how challenging it is to find reliable information online, particularly when it comes to life insurance shopping.
LifePlans.com created its platform to make the search for insurance easier for everyone, even priced conscious shoppers like yourself. It's a great place to compare rates and benefits for many life insurance policies side-by-side.
The platform collects all of the most vital information you need to make a good decision that will affect your finances for the rest of your life.
Click or call to start comparing term life insurance today!