Term Life Insurance
If you're looking for cost-effective insurance, you may want to start with a term life insurance policy.
The Details of Term Life Insurance
Term life insurance is usually less expensive because it only covers a set amount of time-such as 10, 20, or 30 years. You choose the amount of time and the amount your policy is worth. Then, your beneficiary receives a lump-sum payment from your policy if you die before that term is over.
If you live longer than the term life insurance policy you chose, you have the option to continue coverage for an annual, renewable premium. This premium is usually a lot higher, and it increases every year. (Most people simply let their term life insurance policy expire at the end of the term period.)
Why Term Life Insurance is a Good Idea
Because term life insurance is relatively inexpensive, it can be a great choice for young families, stay-at-home parents, or even people who already have a life insurance policy that they want to supplement.
Here are just a few reasons to choose term life insurance:
- You can buy protection for the length of time it will take your kids to become financially independent or while you pay off your mortgage.
- Many term life insurance policies will let you convert your policy to a permanent life insurance policy without needing a new medical exam (which can be important if you've had health problems).
- Your beneficiaries won't pay taxes on the cash benefit.
Factors to Consider about Term Life Insurance
Wondering if term life insurance is the right choice for you? Here are a few reasons it might be:
- If you want a low-cost life insurance policy
- If you're looking for additional protection to supplement another life insurance policy
- If you have children or other dependents
- If you're looking for home mortgage or other loan protection
Common Questions about Term Life Insurance
What can I do when my term insurance policy expires?
You basically have three choices:
- You can continue it by paying higher premiums that increase every year
- Or, convert it to a permanent life insurance policy
- Or, just let it expire
Most people take the third option. Not all term policies will let you convert to a permanent policy, but if yours does you won't need a new medical exam. (That can be really helpful if you've had health trouble that would affect your rates or insurability.)
How much life insurance do I need?
A good rule of thumb is to plan for seven times your salary. If you want a more accurate picture, Allstate has a life insurance calculator that can help.
3AFS
ALLSTATE LIFE INSURANCE COMPANY (ALIC), HOME OFFICE, NORTHBROOK, IL. ALIC IS NOT LICENSED IN AND DOES NOT DO ANY INSURANCE BUSINESS IN NEW YORK. IN NEW YORK, ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK, HAUPPAUGE, NY.