Do I Need Optional Term Life Insurance?
Term life insurance is a contract between the policy owner and an insurance company. The owner pays a premium for a specific term, while the insurance company promises to pay a death benefit to the beneficiary upon the death of the insured. The benefit is usually tax-free. But, before you get a policy, the provider assesses how risky you are, and may ask for a medical exam to evaluate your health.
Factors to Consider Before Getting Optional Term Life Insurance
When choosing a term policy, you need to decide how long you need coverage for, choose a death benefit, and name beneficiaries. You should consider getting enough coverage to care for your family’s needs if you’re not there to support them. You can use a few different methods to figure out how much coverage you need, but it’s best to talk with an experienced professional who can guide you through the process of calculating your actual need.
When shopping for a term policy, compare insurance rates from a couple of sources, and consider the company you’re buying from. Look for a company that offers a long-term relationship, financial stability, and good customer reviews.
Optional Term Life Insurance Features
Some term policies offer a conversion feature that allows you to change your policy to a permanent whole life policy later on without a medical exam. The feature is offered by almost all major insurance companies. You may convert to a whole life policy from a term policy if you’ve had a serious health problem or if you want permanent life-long coverage.
While a term policy has no cash value component, a whole life policy provides a death benefit and builds cash value over time. A whole life policy is generally more expensive than a term policy.
Conclusion
Getting term life insurance is a good idea if you have a young family and want to provide for them. It’s usually easier to get insurance while you’re younger and in good health. Consider getting enough coverage to care for your family’s needs if you’re not there to support them, and choose a company that offers a long-term relationship, financial stability, and good customer reviews.
| Term Life Insurance | Whole Life Insurance |
|---|---|
| Provides a death benefit over a specific term | Provides a death benefit and builds cash value over time |
| No cash value component | Builds cash value over time |
| Generally less expensive than whole life insurance | Generally more expensive than term life insurance |
