Term Life Insurance

Determining Your Term Life Insurance Needs

If you purchase life insurance for yourself, it is an altruistic expense. You will not need life insurance, but your family will. At times, people forget how valuable a person really is. The most unreplaceable commodity is human life. A stay-at-home parent may think that he or she does not need a life insurance policy because she has no tangible income.

The emotional attachment and love of a family member cannot be financially replaced, but the skills and services that a person does are expensive to replicate. Hiring a nanny, a cook, a house cleaning company, a financial advisor, or any other family services can get expensive. Even someone with no income provides value to his or her loved ones.

Concisely speaking, a person with dependents needs life insurance. Dependents are not limited to children, however. Anyone who is a caretaker has dependents. A business owner has employees who depend on the business for their jobs. In reference to life insurance, anyone who has someone depending on them financially has dependents.

Outside of anyone who has dependents, consumer advocates also recommend anyone with wealth or mortgages should also obtain a life insurance policy. You should consider life insurance if you fit any of these descriptions:

• Head of household
• Parents of a child with special needs
• State-at-home parents
• Divorced parents
• Wealthy individuals
• Business owners
• Homeowners with a mortgage
• Someone with a co-signed debt

Also, if someone is looking to have his or her final expenses covered by insurance or is seeking to leave an inheritance, they should obtain a life insurance policy.

Understanding Your Coverage Options

Term Life Insurance provides coverage in the form of financial distribution, also called a death benefit. These policies can be purchased for a variety of terms:

• Yearly/Annual
• 5-Year renewable
• 10-Year term
• 15-Year term
• 20-Year term
• 25-Year term
• 30-Year term
• Term until a specified age (often 65)

Term Life Insurance can be either “level term” or “decreasing term.” A level Term Life Insurance policy will pay a “level” or constant death benefit throughout the life of the policy. A decreasing Term Life Insurance will decrease the amount of the death benefit as the insured person ages.

Age matters in a life insurance policy. Though macabre, eventually, all people die. A life insurance policy is meant to cover an unexpected death so that the family left behind can financially survive the loss of their loved one.

Most insurance companies will not write a life insurance policy for anyone over the age of 80. The average life expectancy in the United States is 78.7 years, according to the CDC. Ideally, a person over the age of 80 will have already arranged the distribution of their finances and assets before he or she passes away.

Why Term Life Insurance is Necessary

Term Life Insurance helps to cover the debt, final expenses, or even outstanding medical expenses. There are some circumstances that may not be covered by a life insurance policy.

• Murder by insurance beneficiary
• Suicide – some policies have suicide clauses that may provide limited coverage
• Risk-taking hobbies or activities you regularly enjoy, such as scuba diving or skydiving
• Illnesses intentionally not disclosed to the insurer

However, if you die because of natural causes, then your family would be entitled to receive the life insurance death benefit.

Life insurance death benefits are often not subject to tax but may be subject to an inheritance tax, depending on how the death benefit is distributed and to whom. Spouses, for example, do not pay inheritance tax on death benefits.

Life insurance is beneficial to adults of nearly any age, as most people have someone who depends on them. Whether you are providing services or skills to those you love, or you have people who depend on you for care or finances, life insurance is the best protection you can provide your loved ones.

To Learn More

To learn more about Term Insurance and how the professionals at Jump Insurance can help you find the right policies for your personal needs, please visit Jump Insurance for more information.