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Understanding Term Life Insurance With Staci Dempsey

Understanding Term Life Insurance With Staci Dempsey
Purchasing life insurance is important because a policy can help to protect your loved ones when you pass away. If you do not have life insurance, your family members could be left with large final expense bills and even the loss of your family’s home because of an inability to make the mortgage payments. While you might understand that life insurance is important, you might be confused by the available various types of coverage. The two main types of life insurance are term and permanent. While both of these different options might benefit you, term life insurance is the most popular coverage of the two.
Term insurance is coverage for a specific amount of time, for a specific amount.  Most term policies will be for 10, 15, 20 or 30 years. If you pass away during the time the policy is in force, your designated beneficiaries will receive a lump-sum cash payment tax-free.  The beneficiaries of your life insurance policy are the people or organizations that you designate to receive the death benefit if you die within the term. Term insurance premiums remain the same for the set duration of time. The premium for a term policy is based on, but not limited to your age, health and lifestyle choices. Finally, the term of the life insurance policy is the period during which the policy will be active.

How long of a term should you choose?

To determine the right term for you, you should start by asking yourself why you need the policy and what situations are you protecting against. Term insurance can be a good option for people who have short term financial responsibilities. This could include becoming a co-signer for a car or student loan. Term insurance could be a good option to fund a short term buy-sell agreement. Others may be taking out a small credit line to help their business.
When you are thinking about the reasons why you want to purchase insurance, you should think about when the reason for doing so will no longer apply.
Asking yourself these types of questions can help you to identify the term that you need. You can then look for a term life policy that will cover you for that set time period.

How much life insurance do you need?

Determining how much life insurance can be calculated in many different ways. Some people will take what their annual expenses are and multiply that by a certain of number of years. Others will take the income they make annually and multiply that by how many years they want to replace their income to their family. Some even simply just have a number that sounds good to them. A licensed insurance agent can share with you formulas to help you determine the amount of coverage you need as well as the amount of coverage you feel most comfortable with. Keep in mind that some life insurance is better than none. Don’t get too caught of up feeling like you have to pick the “right” number that you don’t pick any number.

Your next smart choice

After you have purchased your term life policy, it’s important to review your policy with your agent every year. Just as quickly as life changes, the reasons that you have your insurance can change. You may determine, through your review with your agent, that the policy you have now either isn’t enough or the length of time you have left on the policy, is no longer sufficient. If that becomes the case, your agent can review your options. Whatever you do, don’t simply put your policy away and forget about it. Time goes by fast, and every year that passes is one less year you have insurance.
Purchasing term life insurance can allow you to have the confidence that your loved ones will be financially secure if anything happens to you. When you take time to figure out how much insurance to purchase and the term that you need, you can feel secure that your family will be taken care of after you die. To learn more about life insurance fill out the contact form.
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