Buying life insurance is a good way to protect your loved ones when you pass away, providing much-needed cash to cover funeral expenses, outstanding bills and other costs they might face in the aftermath.
But not all life insurance policies are the same. In some cases, you may want whole life insurance, which covers your family for your entire life. In others, term life insurance — which offers more limited coverage — may be more appropriate. If you’re in the market for life insurance start by getting a free price estimate online first so you know exactly what to expect.
Is term life insurance worth it?
Not sure which type of life insurance is right for your situation? Here’s what to know about term life insurance and when it might be valuable for you.
What is term life insurance?
Term life insurance is a type of temporary life insurance coverage. If you die within the policy’s term — usually somewhere between five and 30 years — your beneficiaries will receive a death payout, which they can use how they’d like. This is different from other types of life insurance, like whole and variable life insurance, which offers permanent coverage for your entire lifetime.
Term life insurance benefits
One of the biggest benefits of a term life insurance policy is that it’s cheaper than permanent coverage. It’s also flexible in that you can pick and choose the amount of coverage you’d like. For example, if you want to ensure your family is covered until your mortgage loan is paid off, a term life insurance policy would allow you to do this.
On the downside, these policies don’t have a cash value, so you can’t borrow against them or withdraw money from them. They also don’t have a savings or investing component that can help you grow your wealth, nor can you adjust the death benefits or monthly payments. If this is something you’d like, universal life insurance, whole life insurance or variable life insurance may be a better choice.