Term life insurance can help your family with any costs, in the event that you pass away, and can help minimize the risks involved with financial hardship on loved ones. When a key family member passes, their employment benefits cease to exist. Although some employers extend special insurance coverage to the employee’s immediate family, this may not be enough to cover long-term needs and expenses.
Term insurance is commonly known as a ‘pure’ form of life insurance because it only covers the insured for a specific period of time. The insurance policies will expire after a certain date, making sure that the policy holder’s family and immediate beneficiaries are covered completely. It can help to protect a family’s financial standing, or make money immediately available for children’s college education or living expenses.
Key Benefits of Term Insurance
A number of benefits exist for term insurance policies, and finding an affordable plan can help minimize the costs involved with alternative options such as permanent life insurance. Key benefits of term insurance include:
- Beneficiaries are paid the face value of the policy when the insured dies during the term
- Term insurance generally costs less than permanent life insurance plans and policies, making it more affordable in the long-term
- Some policies are renewable and may even be converted to a permanent insurance status
- A level term life insurance policy can last up to 30 years
- A higher cash value after proceeds are distributed to beneficiaries
Death benefits are not paid at the end of the term, so establishing the right amount of the policy is important during the selection process. Term insurance is the simplest and easiest type of insurance available. Most have a renewable feature that will allow you to increase the premium if any health concerns or life changes occur, and locking in a secure rates becomes much easier. Qualifying for various policies can be challenging, but once the medical evaluation is completed, the physical examination will easily approve a certificate of insurability.
What Term Insurance Proceeds May Be Used For
Once the insured has passed away and the beneficiaries receive the proceeds, term insurance can be used for a variety of purposes that can maintain your family’s financial health and protect them from hardship. Common uses for proceeds may include:
- Paying off a mortgage
- Setting up a retirement fund for a spouse
- Covering children’s school and college expenses
- Paying off debts such as credit cards or auto loans
- Purchasing stocks for long-term investments
- Covering business expenses
- Cover health costs of immediate family members
- Pay for personal expenses