Are you ready to secure the financial future of your loved ones with life insurance and are wondering which policy is right for you? Check out this Q&A to learn everything you need to know about term life insurance, the most popular type of life insurance!
Q: What is term life insurance?
You may already know that life insurance promises to pay your loved ones a sum of money (known as a death benefit) in the event you pass away. Term life insurance is a type of policy that pays a death benefit if you pass away during a specified period, known as the “term.” For example, a term could be 10, 20 or 30 years, or to-age-65, depending on the policy.
Q: Who gets the money from a term life insurance policy?
When you purchase a term life insurance policy, you choose one or more beneficiaries. Beneficiary/(ies) means the individual/(s), estate, institution or trustee designated to receive the benefits at your death. Your beneficiary could be your spouse, partner, child, grandchild, parent or another loved one. Some people even choose to make a favorite charity or organization their beneficiary.
Q: What can my beneficiary do with my death benefit?
Once your beneficiary receives the cash from your death benefit, they can use the funds however they wish. Many people use life insurance to help pay for burial costs and final expenses, replace lost wages or income, supplement retirement income, pay off debts, and relieve hardship while grieving. Life insurance can help your family keep afloat and maintain their lifestyle in the event you pass away, and they lose your income.
Q: How is term life insurance different than permanent life insurance?
Unlike term life insurance, which ends at a certain time, “permanent” life insurance is a category of coverage that can be kept for a lifetime. Whole life and universal life are two examples of permanent life insurance. Permanent policies are also known for building cash value. Because permanent life insurance pays a death benefit no matter your age when you pass away, it tends to cost more than term life insurance.
Q: How much does term life insurance cost?
Many people choose term life insurance because it tends to be the most affordable life insurance option. Term life insurance features level premiums, which means they remain the same for the entire life of the policy.
Your premium amount is calculated based on many factors, beginning with how much coverage you’re purchasing and the length of your term. Then, your personal information and risk level are taken into consideration. Your age, health and life expectancy may all be considered when determining premium amount.
According to Nerdwallet, the average cost of term life insurance is $26 a month.1 Term life insurance often costs less than nonessential items like a weekly latte or fast-food habit!
Q: How much term life insurance should I buy?
There are many things to consider when deciding how much life insurance to buy. You’ll want to think about your current financial picture, final expenses you could leave behind, your mortgage, and your debts. Also consider your children’s education expenses and if you’d like to leave a lasting financial legacy. Check out this life insurance calculator to get started!
Q: What happens when my life insurance term ends?
In general, when your term life insurance policy term ends, your coverage expires. However, some policies have options to renew your coverage or convert your policy into permanent life insurance. It’s a good idea to ask your insurance agent about these options when you purchase your coverage.
Q: What about my life insurance at work?
Life insurance offered at work is a great benefit because it’s usually inexpensive or even free to employees. However, workplace polices often only provide a basic minimum amount of coverage, and you probably can’t keep the coverage if you change jobs or retire. That’s why many people decide to purchase their own individual term life insurance policies outside of work.
Q: Should I get term life insurance?
Ask yourself these questions:
- Do you have people in your life who rely on you financially?
- Do you carry a mortgage or debts that could burden your loved ones in the event you pass away?
- Would your loved ones struggle to pay for your funeral and final expenses?
- Do you want to ensure your loved ones have a secure financial future after you’re gone?
If you answered “yes” to any of these questions, term life insurance may be right for you!
Q: How do I get term life insurance?
Getting term life insurance easy! Simply find a local Bankers Life agent, who will be happy to help you secure coverage. Be sure to ask your agent about Reliaterm, our NEW term life insurance product that features affordable premiums, 10 or 20-year term options, and options to renew or convert your coverage when your term ends!
1Nerdwallet, Average Life Insurance Rates for May 2023, https://www.nerdwallet.com/article/insurance/average-life-insurance-rates, May 2023.