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Why Term Life Insurance is a Great Investment for Your Family

Written by Nerissa

Term insurance is popular for young families because it provides life insurance for a limited coverage period.  In this article we’ll the other benefits of this type of life insurance product.

 

A term life policy can be purchased for a set number of years, such as 10, 20, 30 etc.  The death benefit is only paid if the insured passes away during that period. If the policy holder lives beyond the term, no death benefit is paid.

 

Typically, there are no cash values or loan values for term life insurance as there is with permanent insurance, but they are still an investment, and one of the best kinds for a young family.

 

Reasons term insurance is a great investment for a family:

 

  • Protection for young dependents who rely on the policyholder’s income.
  • Term insurance is flexible so it can grow with your family, and be converted to permanent at a later date.
  • Term insurance is the simplest and most cost-effective type of insurance for families, because the premiums are more affordable than permanent life insurance.
  • It’s an ideal insurance product when temporary death benefit protection is needed. (For reasons such as a child’s college education, to repay a loan or mortgage, or replace income in the event of the policyholder’s death prior to retirement.

Additionally, there are options when it comes to what type of term insurance to buy. Below we’ll look at common terms and what they mean to consumers.

Different Types of Term Life Insurance

 

Level: The death benefit amount will stay the same for the term.  Premiums may also be level for the term, may be level for a set time, or increase over time.

 

Decreasing: The amount of the death benefit decreases during the term. Premiums usually remain level for the term. This type of life insurance is best for families whose financial obligations will decrease over time. For example as they pay off their mortgage the death benefit amount needed will likely decrease.

 

Annual: The death benefit amount will stay the same for the term, but the premiums will increase annually to keep pace with age-related risks.

 

Renewable and Convertible Term Life Insurance

 

Purchasing a renewable term life insurance policy means that the policy can be renewed for another term without the policyholder having to prove their health status.  As long as the premiums are paid when due, it will renew up to a pre-determined maximum age.

 

In the life insurance industry “convertible” refers to term policy that can be converted to a permanent life insurance policy. Thus, there is an investment component added.  This is an ideal option for young families to consider when evaluating the finances in the future.

 

For more information about why term insurance is a great investment for your family, or for advice unique to your situation, get in touch!  The consultation is free and will help you discover what plan, and products, best suit your family.

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