The Real Value of Term Life Insurance by Lorena Bortz
When Carol was starting out after college, her parents instilled in her the idea of taking out life insurance on herself as soon as she could. After doing a lot of research on the subject, Carol decided she would start with term insurance because she was young and was not bringing in much money yet. She found a 20-year policy that was within her price range. Carol made sure it included a waiver of premium if she became disabled and could not work and a conversion option so she could convert it to a whole life policy without further underwriting if she chose to do that in the future.
Everything was going well for Carol. She married a wonderful man, they had a child, and her career was progressing nicely. Out of the blue, during a routine check-up, the doctor found a lump and immediately ordered more tests. When the results were in, Carol found out that she had breast cancer! This knocked the family for a loop. Everything they had counted on for the future now looked bleak and uncertain.
After surgery and then chemo, Carol was very thankful to hear that the prognosis was looking good. She was cancer-free again, and things were looking up.
Carol’s insurance agent heard about her surgery and touched base with her frequently. After the shock and turmoil subsided and things were getting a little more back to normal, her agent brought up the fact that her term policy only had six months left, and getting new insurance at this point would not be possible due to having had cancer. The good news was that her term policy was still convertible. She gratefully proceeded to convert it so she would not lose coverage and her family would remain protected.
Some people do not realize how valuable term insurance can be. They think that since it does not accumulate in value, then it is a waste of money. Also, if you do not use it, you have lost all your premiums when the policy reaches maturity. But you are really investing in your family by providing coverage if something happens to you.
Because the premiums are lower the younger and the healthier you are, it often makes sense to buy term. Single people and young families can significantly benefit from that peace of mind. If you wait until you think you can afford a higher face amount, you may never do it, or you could be sadly disappointed if you develop health issues before applying.
Term insurance policies are also flexible because they come with different lengths of time of coverage. An annual renewal term could be for as little as one year. There are other policy lengths, such as 5-, 10-, 15-, 20-, and 30-year policies. These could be used for security during the period in which you have a short-term debt, have a mortgage, or while your kids are in college (to cover tuition and expenses). When you have specific needs like these, having term insurance is a logical safeguard.
Another advantage of term insurance is that these policies are simple and easy to understand. You know what you are getting, how much it costs, and for how long your rate is locked in. Being strategic and diligent will put you ahead of the pack and help you sleep better at night!