What You Should Know: Term Life Insurance

By: Ian Koch

Many consumers are confused by the many choices for life insurance that are on the market today. What few realize is that in most cases the best type of coverage is often term coverage depending on their situation and financial obligations. In this article we'll take a look at this special type of coverage and show you how it can benefit you and your family while keeping your costs under control. But before that, let's take a look at the concept 'term life insurance'. If it an ordinary life insurance or some special variant? Wikipedia, the free encyclopedia ? 2001-2006 says:

"Term life insurance is a type of life insurance that is temporary, as it covers only a specific period of time, the relevant term. It can be considered pure insurance because it builds no cash value. This is in contrast to permanent life insurance such as whole life, universal life, and variable universal life.

Term insurance is the cheapest way, in the short run, to buy a given amount of insurance death benefit on a coverage per premium dollar basis."

If you have ever obtained a life insurance rate quote you know that rates can vary widely based on policy type. Most of us buy insurance that we really don't need and end up spending a fortune in premiums instead of investing that money in other areas that could help us enjoy a better lifestyle before we pass on. Contrary to what we have been told, term life policies are usually sufficient for about 75% of the population.

If you look at what insurance is providing the main reason we carry it is so we can protect the financial future of our family should we pass away early in life. Term policies meet this need by providing coverage during the years when we have the most financial obligation to our families: when we have children at home, mortgages and other large debts. For most of us this period in life is between the ages of 25-60. By the time we reach 60 years of age our houses are paid off, our children have graduated college and most large debts are paid off and we begin looking forward to retirement.

While these types of policies don't build value and terminate at a specific time in the future (usually at age 65 or 70) they do provide the major protection we need at affordable prices for the most vulnerable financial times in our life.

Life Insurance
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