How does term life insurance work?

Term life insurance is one of the most affordable types of life insurance policies you can get. It’s an easy to understand, pretty straightforward type of coverage. It will protect your loved ones for a set period of time or term. Common term lengths are 10, 15, 20, & 30 years. 

Step #1 Determine the amount of time you need the policy for and the amount of money it would take to care for your family if you were gone.

Step #2 Talk to an insurance agent. We just so happen to know of some amazing agents in Sacramento, Lodi, and Roseville California that can help. All the agents are really nice and incredibly knowledgable. **Click here to call an agent. Our agents will answer all of your questions and get you a policy that’s right for you & your family. 

Step #3 Now that our agents got you the policy that’s right for you & your family, you’re covered for that set amount of time. For example if you purchased a 20-year term and passed away in 18 years from the date you purchased the policy, your beneficiary or beneficiaries would receive the payout from your death benefit to cover their living expenses, bills etc. The death benefit is often income tax free as well. 

Now, let’s say you outlive the policy term you chose. You still have options. If the policy is a guaranteed renewable policy there’s a feature that ensures that an insurer will continue coverage as long as premiums are paid. If this is the case, you can have it continue in increments of one-year or just elect to have your coverage end. Please keep in mind, life insurance premiums will be higher in the renewable phase. That’s why it’s important to purchase the right amount of time for your policy. 

Do you need term life insurance?

• Do you share financial obligations with a partner or family member, friend or business partner
• Do you have children or plan to have them
• Do you have family members who rely on your income 
• Have you cosigned on any debt? For example, private student loans, a cosigner who would be on the hook for them if you passed
• Maybe you just want to help with burial expenses or to make life a little bit easier

Who is term life insurance right for?

• If you’re in your 20’s and incredibly health you may want to look into alternative choices like universal life, or permanent life policies. These policies cover you for a longer period of time and cost a lot less when you are young and healthy, but will ultimately come with higher premiums than term insurance. 
• If you’re middle aged or older and want to make sure your family is covered for a predetermined amount of time, a term policy would fit your needs.

In conclusion; Term life insurance policies are right for the policy holder that wants an affordable plan with adequate coverage for a set amount of time. If you plan on outliving your policy or would like to be covered for a timeframe that’s not set in stone, look into a permanent life insurance policy. We discuss permanent life in more detail here. 

If you still have questions regarding life insurance or want to get a quote for coverage, reach out to one of our agents. We’re nice people and we know a lot about life insurance 😉