What is Term Life Insurance and Why Is It a Good Choice?

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Term life insurance, also known as term assurance, is a type of life insurance that provides coverage over a limited period of time (the relevant term) at a specified or fixed rate of pay.  Term life insurance is mainly a death benefit insurance, and its purpose is to provide coverage of financial responsibilities for the insured.  While no one likes to think about what could happen to their family in the event of a disaster, having the right type of insurance can really reduce stress and provide a sense of comfort for those who have invested in the right kind of insurance.

Depending on the plan, the financial responsibilities covered under term life insurance may include the following:

Dependent Care Costs – Young children are often the primary concern for those interested in insurance. With food, shelter, clothing, health care, education, and the many expenses surrounding raising a child, those seeking insurance usually start with the desire to protect their loved ones.

Funeral Expenses – With low cost funerals running at around $2,500, many consumers are not prepared for all the expenses associated with funerals. These expenses may include basic fees, transportation, flowers, clergy services, obituary notices, etc.

Mortgages – A mortgage loan is a loan that secures property. Most consumers will take a mortgage loan from a bank. Specifics of the loan depend on the size of the loan, the maturity of the loan, the interest rates, and the method of payment.  This tends to be one of the biggest concerns for those with insurance needs.

Consumer Debt – The type of debt that consumers use to fund consumption, rather than investments.  This is mostly associated with credit card purchases, and consumable items that do not appreciate over time.

College Education Costs  – From books to housing to tuition fees, college education costs have skyrocketed. In 2011 – 2012, public four- year colleges costs, on average, $8,250 in tuition and related fees.

Insurance industry experts may recommend term life insurance in place of permanent life insurance because of the cost benefit.  Term Life Insurance tends to be less expensive, and it provides coverage on expenses until the insured party amasses sufficient savings to protect those whom the insurance coverage was intended to protect.  As an example, the insured may choose his or her policy to expire when he or she retires; based on the assumption that he or she has saved enough funded to provide for his or her dependents.

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