“Should I get term life insurance?” It’s a question many people ask, particularly parents. And if 2020 taught us anything, it’s that some things are just plain out of our control. But today, there are more tools and products than ever before — like online term life insurance — that could help you take back some of that control by bringing smart financial planning within reach.
What Is Term Life Insurance?
The word “term” is key here, because unlike permanent life insurance, term life insurance is paid for and covers your beneficiaries over a set term — like 10, 20, or 30 years. As a general rule, term life insurance can be more affordable than permanent life insurance. For example, a healthy 35-year-old woman could buy a 20-year term life policy with $500k in coverage for as little as $22/mo.
Protect Your People
What does that term life insurance policy get you? In many cases, a term life insurance payout is tax-free, and it can be spent (or saved) however the beneficiary wants or needs. Imagining a day when you’re no longer around may not be a fun exercise, but it can provide important perspective, especially when thinking about the finances of those you’re leaving behind. Here are some examples of ways a term life payout could be used:
Mortgage / Rent
Taking on a mortgage is a big financial responsibility, and doing so with one less income than you’re used to can be a tall order. A payout from a term life insurance policy could help ease the potential burden your family may have to shoulder. Similarly, the money could be used to pay rent during what is often a really tough time.
Bills / Debt
Whether it’s medical bills, a car loan, a credit card, or something else, most people leave some amount of debt behind. And while it would be nice if that debt simply disappeared, we all know that’s not how it works. A spouse, partner, family member or other relative is usually tasked with managing those leftover expenses.
Did you know that the average funeral cost ranges from $7,000 up to as much as $12,000?* That’s a significant and often sudden price tag to be confronted with.
Anticipating the big stuff is good, but an important part of financial planning is to not lose sight of the day-to-day expenses that add up over time. Losing a source of income can make paying for groceries, utilities, childcare, and other things more of a stretch.
If your loved ones are fortunate enough to be able to stash away some or all of that money in a savings or investment account, it could make a big difference in their long-term financial health — and that’s really what financial planning is all about.
What to Know Before Applying
Here are some things to keep in mind before applying for a term life policy:
Determine Your Coverage Needs
Adding up your current expenses like mortgage, car payment, or student loans, as well as anticipating some future financial needs, can help you determine exactly how much coverage is right for your family.
Once you’ve got a coverage amount in mind, do your research! There are lots of companies to choose from, and they’ll charge different premiums based on your situation, your health, and your coverage needs.
Most term life insurance providers will require a medical exam or bloodwork. This helps them get a fuller picture of your health. But if you don’t like needles (and who does, really?) there are exam-free options.
Ready to Take the Next Step?
A term life insurance policy could be an affordable way to help keep your family financially ready for an uncertain future — and it just might help you sleep better at night, too. Buying affordable life insurance is easier than ever thanks to modern technology. If you know you need coverage, don’t put off this easy-to-achieve financial resolution. If approved, you can start your coverage immediately. So as one New Year’s resolution after another falls by the wayside, consider adding “apply for term life insurance” to your list, just so you can have the satisfaction of crossing it off quickly.
About the Author
Zach Rapport is the Senior Copywriter at Bestow, a life insurance agency that’s using technology to make coverage accessible to more families than ever before. He’s worked in fintech/personal finance for over five years and believes that a personable, educational approach is key to helping people make the decisions that are right for them, a philosophy he brings to his work at Bestow.