Term Life Coverage
Today very few people own their own individual life insurance policy. Most only have coverage through their work. The type of life policy that people normally get at work is term life coverage, but it since it covers everyone at work is known as group term insurance. Like anything that comes as a benefit from work there are good and bad points.
Disadvantage of Group Term
The main disadvantage of group term life coverage is the amount of coverage. Most work life insurance is only 1 or 2 times a person’s annual salary. Financial experts recommend a person should have at least 6 to 10 times their annual salary.
The amount of term life coverage you would need to properly protect your income would be between $300,000 and $500,000.
Life Insurance is Another Expense
Most people look at life insurance as just another monthly expense and something only old people should own. Since 
life insurance only benefits the ones you leave behind not you directly a lot of people ignore it. This is a mistake. Think of Life insurance as income protection insurance. When you purchase a life insurance policy you are protecting your income for a given period of time. The 6 to 10 times figure I discussed early is 6 to 10 YEARS of your income you want to protect.
If you pass away whoever you name in your will will get the agreed insured amount in one lump sum. So they will get 6-10 years worth of your income in one check.
You Protect Your Home & Car
Here is one way to look at term life coverage. You own home insurance to protect your home in case it burns down. Most homes are generally worth $100,000 to over $1,000,000. Even when a home is paid off people still own home insurance. Why? They don’t want to have to come up with $300,000 to rebuild a new house.
Shouldn’t you take the same philosophy when protecting your income? Is your home or car more important than your or your spouse?
How much of your income do you want to protect? A 30 year old, who earns $50,000 and works 30 years would earn over $1,500,000 over those 30 years without inflation or pay raises.
Once you die your income is gone, but your family still needs to live. A funeral is expensive and your spouse or partner will still have a mortgage or rent to pay, but you will not be there to provide your income.
Your House Burns Down
Term insurance works like your home insurance. For example, let’s say your home is worth $300,000 and is insured for $300,000. What would your insurance company pay if your home burned to the ground? $300,000.
A term life coverage policy pays the same. What would your life insurance company pay if you had $300,000 and you passed away? The life insurance company will pay your beneficiary $300,000. Another term for the coverage is called the “Face Amount of Coverage.”
How Long is Your Income Protected?
The other part of a term insurance policy is the “term” of the policy. The term means how long you locked in your premium and coverage. A 20-year term insurance policy means your rate and term life coverage is set for 20 years. At the end of the term you can decide to renew for another term or let it expire. The last part depends on the conditions set by the life insurance company.
Lock In The Longest Time Possible
A good rule of thumb is to lock in your rate and term life coverage for as long as possible. The reason is you do not want to have to renew your life insurance policy every 5 or 10 years at a higher premium. The healthiest most of us will be is today, no one knows what tomorrow will bring (which of course is the whole point of insurance), by signing your policy for 20 or 30 years you are hedging against any future health issues which may cause insurance companies to refuse you cover or increase rates on you.
A term life coverage policy is the best way to protect you and your family if something bad happens. After all the reason to have any type of insurance is to make sure bad situation from getting worse.
Bad Situation Need Not Get Worse
Most people do not have an extra $20,000 to buy a new car if their car is totaled in a car accident. We also do not have $300,000 sitting in the bank case our house burns to the ground. We also do not have an extra $300,000 to replace a spouses income for the next 6 years while we deal with grief and try to carry on with our lives.
Remember, whether it is car insurance, home insurance or term life coverage the insurance you bought is to prevent a bad situation from getting worse.
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Cost of term life insurance
When people are looking at buying life insurance cost is usually the #1 factor for buying or not buying. The cost of term life insurance is at an all time low. Term insurance is a great low cost way to protect your family.
The cost term life insurance has decreased substantially over the past 20 years. There are several factors, which are leading to lowering the cost.
#1. People are living longer.
People living longer may not be an obvious reason for lowering the cost of term life insurance, but it does. The reason is tied to mortality tables. As people are living longer there are fewer claims on term life insurance policies. These 
savings are passed along to the consumer.
If you compare the cost of $100,000 of term insurance 20 years ago the cost would be lower for the exact same policy with the same issue age. This is why it is a good idea to review your life insurance every 5 years, you can get new insurance at a lower price or you can buy top up insurance. I know people who buy new insurance policies every 5 years, they have usually got more disposable income than they had previously and it is a cheap way to increase their cover.
#2. More Companies Are Offering Term Insurance
In the past most companies only sold a Whole Life Insurance policy. These policies have a lot more fees and expenses than a comparable term life insurance policy. The consumer has become more aware of term insurance over the past 15 to 20 years. This is due to many major financial magazines such as Smart Money and Money Magazine recommending the benefits of purchasing term insurance.
The reason for the savings comes down to the Law of Large Numbers. The Law of Large Numbers spreads the risk across to everyone purchasing a life insurance policy. However, even though more families are purchasing term life insurance the actual number of total life insurance policies has decreased over the past 20 years.
#3 Depends on Your Age
Since people are living longer the actual cost of term life insurance has decreased for everyone regardless of age. This is great time to purchase a term life insurance policy because rates from insurance companies are at historic lows.
Health Can Be a Reason for Higher Costs
The problem many people make is delaying the purchase of life insurance. They want to wait until they have kids or buy a home. However, the cost of term life insurance is based upon your age and your health when you apply. Age and health are the two most important factors when determining your cost of term life insurance.
A potential health problem is an important reason for purchasing life insurance early in a married couples life. A lot of people do not consider buying a life insurance policy until they have kids. Their thought process goes like this: We don’t need life insurance now because we do not have any kids. We’ll just wait a couple of years. The problem with this thought process is you do not know what your health will be like in 2 to 5 years from now. What if you become diabetic or gain a lot of weight?
Rated or Declined
Life insurance policies can be rated or declined for many reasons: diabetes and weight are just two of the most common reasons. A rated policy means the insurance company will approve you, but you have to pay more for the cost of term life insurance. The increased monthly payment is a reflection of the increased risk factor that people with diabetes or who are over weight represent.
The best advice is to buy a life insurance policy when you are younger and the cost of term life insurance is lower. You may think you don’t need it, but even if you died while young and single there are still costs involved with burial. Since the price of the policy is locked for the length of the term you are actually saving money in the long term.
Term life insurance coverage is currently at a historic low point price wise and you do like to buy things on sale or at low prices, right? Take the time to see if you qualify and purchase a term life insurance policy.
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Opting for term life insurance coverage has gained a lot of popularity in the recent past. More and more people have begun to realize the importance of life insurance coverage and are utilizing this option to provide a sound financial cover for their families. Often the sudden death of the earning member in the family leaves the family in a financially tight situation, so to avoid such a problem people have started buying the term life insurance coverage.
Depending on the need of the person there are two main term life Insurance coverage option he can choose from; one is the cheap decreasing insurance which basically pays off the balance of any mortgages which are on the name of the deceased and the other is the cheap level term life insurance 
which not only pays off the balance of the mortgages but also gives the family a lump sum amount in case of the insured person’s death.
Since the term life insurance coverage mainly aims at providing coverage for the mortgaged property after the insured person’s death, the experts of the insurance industry often recommend that these policies should be taken in several payments with the duration for which the property is mortgaged. In this way the insured person can rest assured that the family will not have to bear the financial burden of paying off the mortgages in case of the sudden death of the insured person. This is a great option that many people overlook these days and then they end up having to pay for the mortgage of their loved one in the end. This can be very detrimental to the family left behind because they not only have to deal with the death of their family member, but now they also have a financial burden left behind, therefore be sure to choose the term life insurance coverage that best qualifies for your situation.
While the term life insurance coverage is very reasonably priced, people need to be very careful when they choose to buy term life insurance. Since these insurance policies are very much in demand, a whole lot of companies are providing this insurance online and offline. People usually prefer to buy their term life insurance coverage online, however it is important that they verify the authenticity of the online company before buying their insurance from the online company since there are so many people on the internet that are just there to scam the innocent.
Online insurance companies provide the same term life insurance coverage as the land based companies; however the price that the online companies quote is usually much lower in comparison to the land based companies. The online companies are able to provide these low prices in spite of giving the same cover as their land-based counter parts because of the low overhead cost that they have. Being an online company saves them a lot of expenses and they translate these saved costs into attractively priced term life insurance coverage policies.
While buying the term life insurance coverage from the online companies is extremely beneficial, people should make it a point to read the reviews of the company. Reading reviews on different term life insurance coverage will you an idea of how long the company takes to provide their services and settle the claim. No one would want to make regular payments for the term life insurance coverage premium, only for their family to eventually find out that they cannot claim the amount when they are faced with the loss of the insured member of the family. Therefore it is recommended that everyone who plans to buy good term life insurance coverage, studies the details and reputation of the company that they intend to purchase the insurance from.
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