Term is the Cheapest Life Insurance

Many people overlook the importance of life insurance because they see it as another bill they don’t want to pay.  However, even owning a cheap life insurance policy can be a big help to families when the unexpected happens.  Just having money available to cover final expenses will ease some of the burden and allow loved ones to grieve without financial stress.

What is Term Insurance?

Term insurance is an excellent solution for people looking for a cheap life insurance policy.  It is temporary insurance that is set for a number of years and has a set premium.  The owner of the policy chooses the benefit amount, pays the premium, and selects the term.  In a nutshell, if the term expires and the consumer is still alive, they receive nothing.  If they pass away during the selected term, their beneficiary will receive the settlement.  There are a variety of term policies and each serves a specific purpose.

Types of Term Insurance

The most common types of term insurance are level term, return of premium, and decreasing term.  Level term insurance is a standard policy where the owner chooses a term, usually from 10 to 30 years and pays a fixed premium for coverage over that time period.  A return of premium policy is a level term policy with a rider attached to return the entire amount of premium paid to the owner of the policy if he or she is still alive at the end of the term.  Decreasing term means the coverage decreases every year, but the premium stays the same.  These policies are typically used to cover mortgages, since the amount owed continues to go down.

Why is Term Cheaper?

Term is usually the best way to get a cheap life insurance policy because it is a very straightforward policy.  Unlike a whole life policy, Term insurance is a temporary policy and only pays out if death occurs during the specified duration.  A whole life policy can cover an individual for the rest of his or her life and can often be collected upon while the policy holder is still alive.  This makes it more expensive, because the policy always pays out, whereas with term, there is a bit of a gamble and the insurance company may not have to pay anything at all.

Which is Best?

Nobody can say which type of insurance is the best for an individual without looking at that person’s specific circumstances.  Many factors must be taken into consideration before determining which is best.  A few of these factors are age, budget, and the goals of the policy owner.  If a cheap life insurance policy is needed, term is probably the best, but before purchasing, a life review should be done with the sales person in order to determine what will best meet your needs.

Purchasing life insurance doesn’t have to be expensive.  After an extensive review, it may be determined that a more expensive policy would be best, but consumers always have options.  It is better to have a cheap policy that may not provide everything that is hoped for, than to have none at all.

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