Good term life insurance is life insurance that lets you receive a death benefit at a price you can afford. Term life insurance should be affordable long term and have a death benefit that doesn't decrease. There are many life insurance brokers online selling life insurance, and many of them are term life insurance brokers. Make sure you get objective information before buying from any life insurance salesman.
There are two types of term life policies. Annual renewable term life has a policy that must be renewed every year. Policy premiums increase every year. With level term life insurance, the policy premiums remain level throughout the entire term of the policy, along with the death benefits.
The benefits of a good term life policy are that it will be affordable over the long term. Generally, this means the policy will be a level premium term life insurance policy. These types of policies guarantee that the premium remains level along with the death benefit. A good term policy is also one that serves your financial goals. For example, a good term policy for a mortgage would be a 30-year term policy. A good term policy to cover a car loan would be a five-year policy.
Term life insurance does have a few disadvantages. First, term life is temporary insurance. This means that even the best term life policy only lasts a maximum of 30 to 40 years. After this period, you will lose your life insurance policy or it will become too expensive to renew. Secondly, term life insurance does not build any cash value. Cash value savings represents a return of your premium amount plus interest.
While cash value policies are generally considered more expensive than a good term policy, they also ensure that you never lose money as a result of purchasing the policy. Term policies don't always pay a claim. Permanent policies always pay a claim as long as they remain in force.
A common misconception is that there is one type of term policy that is best for all situations. While level term life insurance is generally better for most situations, there is no one particular type of term life insurance that is going to serve your financial interests all of the time.
Make sure you know how long you need life insurance for. The length of time you require life insurance determines the best policy for you and your family. Also, consider the financial ratings of the company you are buying your life insurance from. Rating companies like A.M. Best rate life insurers and can tell you whether your insurance company is financially stable.
- "Practicing Financial Planning for Professionals, 10th Edition"; Sid Mittra, Anandi P. Sahu, Robert A Crane; 2007
- "Life Insurance"; Kenneth Black Jr., Harold D. Skipper Jr.; Prentice-Hall Inc.; 1994