Is Term Life Insurance Worth it?

We write endlessly about the times in your life when you need life insurance, how to pick your beneficiaries, and even why buying life insurance online might be the best option for you.

But there’s usually a question that lingers when you’re going through the researching and buying process: Is life insurance really worth it? If you have a spouse, children or other family members who rely on you financially, then the answer is pretty simple: It’s absolutely worth it.

Why Is Life Insurance Necessary?

You have to approach life insurance like you would any aspect of your life that poses a risk and ask yourself, “What’s the worst case scenario?”

If you’re on the fence about buying coverage, then consider how your family might fare if you were no longer around. How would they keep up with day-to-day bills? Or, how would your spouse afford childcare or education expenses?

Most people would agree that, without a financial cushion from life insurance, their family might face a dire money situation. That’s why term life insurance is so valuable. It’s an affordable way to protect the people you love most financially.

Life insurance helps provide financial security if you were to die suddenly so that your family won’t struggle to cover day-to-day expenses. It can help:

  • Replace lost income and cover living expenses, like rent or a mortgage
  • Spare your family from needing to pay off debts you leave behind
  • Provide for your kids’ care if you are a stay-at-home parent
  • Cover burial, estate taxes and other final expenses
  • Fund college expenses
  • Cover unpaid medical bills or taxes
  • Create an inheritance or supplemental retirement fund through an income tax-free death benefit

Your family’s savings shouldn’t be depleted to cover those expenses.

Even if you’re living the single life with no spouse or kids, term life insurance may still be necessary. It can help protect your parents or other co-signers from needing to pay off the mortgage, student debt, credit card debt, or even a car loan that you leave behind.

However, for most people, life insurance becomes necessary when you get married and have a spouse and children who rely on your income.

How Term Life Insurance Works

Term life insurance is one of the simplest (in a good way) and most affordable types of life insurance. It insures your life for a period of time of your choosing, such as until your mortgage is paid in full or your kids are adults. This helps ensure that none of your financial obligations will burden your family if you were to die unexpectedly during the term length.

Most insurers offer term lengths of 10, 15, 20, 25, and 30 years. You make (in the case of CoverageInsure Term policy owners) monthly payments for the policy term, and in the event of your death, the policy pays out a death benefit to your beneficiaries.

If you are young and have many working years ahead of you, a long-term policy (30 years) might make more sense. If you have small children, the same is true. Perhaps you want your term length to end around the time your home mortgage or student debt is paid off — in that case a shorter term length might make sense to protect your co-signers from needing to take over loan repayment before it’s paid in full by you.

Determining which term length you need is actually very easy. You can use an online life insurance calculator to receive a recommendation on a coverage amount and term length that best fits your financial situation.

 

How Much Does Term Life Insurance Cost?

Many people don’t realize how affordable term life insurance can be. It usually offers ample coverage at a much lower premium amount than many other types of life insurance.

 

That’s over 4 times more than a policy would actually cost. A 20-year, $250,000 CoverageInsure Term policy for a healthy 30-year-old woman would cost about $12 per month. That’s less than your online TV streaming services.

And even if you’re slightly older, you can get affordable coverage to protect your family. A thirty-six-year-old man in excellent health can buy a 20-year, $750,000 policy for as little as $31 per month, for example.

Your individual rates will depend on a range of factors including your age and your overall health. If you’re curious how much (or little) your premiums might be, you can get a free estimate online.

Why Term Life Insurance Versus Other Types?

There are many types of life insurance policies. If you’re looking for a policy that offers more than $100,000 in coverage, term life insurance is usually the most affordable choice.

Another type of life insurance coverage that offers high death benefit amounts if permanent life insurance, but it’s usually far more costly. For example, a $500,000 whole life insurance policy for a healthy 35-year-old male would likely cost more than $500 per month, compared to $21 per month for a no exam term life insurance policy.

The price difference can be attributed to the fact that permanent life insurance policies cover you for a lifetime versus a term length. They also have a cash value component that you can borrow from over time – although, borrowing from the policy cash value can reduce the total death benefit for your family.

Overall, term life insurance is a simple and affordable life insurance option. It has no investment components to track, and no cash value or loans that impact the final payout. You simply make the monthly payment, and you’re covered for the specified term length. Term life also requires only minimal maintenance – just a review of your financial needs periodically – like when you have another child or if your income increases considerably from when you first took out the policy (a good problem to have.)

In addition to affordability, term life is a product you can build on. If you start out with just $100,000 in term life insurance coverage when you’re young, for example, you’re not stuck with that coverage amount forever. Provided your health allows you to qualify for more coverage, you can continue adding term life policies as your lifestyle and situation changes. As we mentioned already, having another child might give you a reason to buy more term life insurance coverage. Earning more money over time or advancing in your career is another smart reason to buy additional term coverage to replace your income upon your death.

Employer-Provided Life Insurance is Often Not Enough

Many people assume that if they have life insurance through work, they’re set. Usually, employer-provided life insurance is not worth it if you are paying for coverage.

The fact is that most people don’t have enough term life insurance through their employer if they are married, have kids, or hold significant debt like a mortgage. Typically, employer-provided policies only cover, at most, two to three times your income, while the often-recommended amount is at least six to ten times.

Another important consideration is that coverage usually ends when you leave your job, which could leave your family without coverage.  Your best option is to hold an individual policy to ensure you have enough coverage and to lock in an affordable rate while you’re young and healthy.

Keep in mind, it’s perfectly acceptable to have an individual term policy on top of the coverage offered by your employer. More coverage means more protection for your family. However, when many people realize they need additional coverage, they usually think it would be easier to add on more coverage to their existing work policy. Employer-provided policies are at group coverage rates, which means insurers charge everyone the same amount of money. If you’re young and healthy, you’ll likely be paying significantly more for coverage than if you were to receive an individual rate because you’re making up for the risk insurers take on some of the older, less healthy people at your company.

No matter what your employer offers, it’s worth it to carry your own coverage that keeps you covered no matter where you work.

Understanding Your Needs

Term life insurance isn’t a complex financial product and is a necessary part of financial protection. What’s most important is that you understand what your coverage needs may be and if you do need coverage, make sure you’re not putting off the purchase.

Like we mention above, term life insurance (and most life and health insurance for that matter) is more affordable when you’re young and healthy. The earlier you buy your term policy, the better your rates. So the time to comparison-shop and act is now. Given its low cost and high value, a term life policy that fits your coverage needs is clearly worth it. Picture the alternative: dying without a policy and the potential for leaving your family with a huge financial burden. That’s a high cost to pay.

Life insurance needs aren't one-size-fits-all.

Five Steps to Buying Life Insurance

If you’re someone who is unsure of where to begin, consider these steps as you search for the right amount of coverage to protect your family.

Step 1: Fill out a life insurance calculator.

The best way to get a general idea of how much life insurance coverage you need is to toy around with a life insurance calculator. By entering details like your age, income, overall health, and family status, you can find out how much term life insurance coverage is suggested for your family and compare quotes to top insurers. Check out our free term life insurance calculator.

Step 2: Ask yourself if you want additional coverage for any reason.

Our life insurance calculator can guide you to the average amount of coverage you’ll need based on the information you provide, but it’s possible you have other, personal factors to consider as well. Maybe your goal is buying enough coverage to leave behind a legacy for your children, or to financially care for an elderly parent or relative. Either way, you can and should buy whatever level of coverage will help you sleep better at night.

Step 3: Pick a process.

There are two main ways to buy a policy: through an agent or buying life insurance online. We’re partial to online, because it allows you to get covered immediately and on your own time. Also, because it’s what we offer. If you’re comfortable shopping and banking online, this is probably the best choice for you.

Step 4: Check the rating of the provider.

A company such as A.M. Best does the homework on an insurer’s claims-paying ability and record, to help determine whether the provider is considered reliable and in good financial standing. We’d recommend providers rated A+ or better. Our CoverageInsure Term policy is issued by MassMutual, an A++ rated insurer.*

Step 5: Get the coverage you need.

Once you’ve decided how much coverage you need, how you want to purchase it and from which insurer, it’s time to get covered. There’s no reason to delay buying life insurance because it’s now easier than ever with thorough and simple online services. And the peace of mind is absolutely worth it.

Can I Buy Life Insurance on My Significant Other?

Americans are waiting longer to get married.  This doesn’t mean that today’s couples love each other less than generations past.  Most couples are postponing marriage because they want to be financially secure first.  Part of being financially secure is owning life insurance.

It’s very common for married couples to purchase life insurance on one another or name each other as beneficiaries of their policies.  When you buy life insurance on someone, you need to have consent and insurable interest.  Insurable interest exists when one person financially benefits from another person living.  Essentially, they are worth more to you alive than dead.  With married couples, it’s obvious that they have an insurable interest in one another.  They live in the same house, both contribute toward bills and maybe raising children together.

The life insurance industry changes and adapts to keep up with societal norms.  According to the U.S. Census Bureau, the number of U.S. adults who are unmarried yet cohabitating has risen 29 percent since 2007.  For couples that aren’t married but want to buy life insurance on one another, you may need to check a few more boxes, but it isn’t as difficult as it used to be.

Buying Life Insurance on Your Fiancé/Fiancée

Being engaged shows a higher level of commitment and financial dependency than dating – in the eyes of the life insurance company.  It’s typically not an issue for engaged couples to buy life insurance on one another.  Some life insurance companies will want to know that a wedding date is set, but this isn’t always required.

How to Buy Life Insurance on Your Significant Other

If you’re looking to get life insurance on your significant other or name them as the beneficiary of your policy, CoverageInsure can help.  We have helped many married and unmarried couples purchase life insurance.  Start the process by running a free and anonymous term life insurance quote.

If you want to buy life insurance on your significant other, be sure to complete the online quote and application using their information.  (Remember: You can always contact us directly if you want one-on-one assistance.)  After running quotes, when you’re ready to apply you will be brought to a page that looks like the screenshot below.

You can see it asks that you fill out the form with the insured’s information (your significant other.)  The life insurance company will need to personally contact the insured (your significant other) to verify application information and, if necessary, to schedule the medical exam.

Remember, you can’t just buy life insurance on anyone.  Consent is required.  If you believe life insurance is important for your significant other, but he or she doesn’t agree, you can’t just buy it on them anyway without their knowledge.  If you’re having trouble getting them to understand the importance of life insurance, check out our blog post How Do I Get My Spouse to Buy Life Insurance?  There are some tips that may be helpful.  We look forward to helping you and your loved one buy life insurance.

When Does a 10-Year Term Policy Make Sense?

Term life insurance can be seen as income replacement if you were to die prematurely.  It’s affordable and customizable.  One of the ways you can customize your term life insurance is with the term length.

The term length of a policy determines how many years you have insurance coverage for.  A permanent life insurance policy lasts forever – hence calling it “permanent.”  A term life insurance policy lasts a specific number of years – a “term”.  The typical term length options are 10, 15, 20, 25 or 30 years.  So, if you were 30 years old and you purchased a 25-year term policy, you would be insured until you were 55 years old.

A 10-year term policy is one of the cheapest life insurance policies you can buy, which makes sense because the coverage it provides lasts the fewest amount of years.

The Estimated Monthly Cost of a
$250,000 10-Year Term Policy
for a Healthy, Non-Smoker

Age

Male Female
25 $11

$10

30

$11

$10

35

$12

$11

40

$14 $13
45 $20

$17

50

$28 $23
55 $41

$31

60

$63

$46

Even though a 10-year policy may not last very long, there are still situations in which it makes sense to purchase one.

Buy a 10-year term policy if it’s all you can afford.

You may have a lot of bills.  Maybe you’ve got credit card debt.  You couldn’t possibly afford to buy life insurance now, right?  Wrong.  It’s in situations like these when you likely need life insurance the most and can’t afford not to have it.  If your income were to suddenly disappear, what would happen to your family?  If you were already struggling financially, your death won’t make things easier.  Final expenses – such as any debt you had and your funeral costs – would be up to your family to somehow pay.

A 10-year term policy can protect your income and your family’s future while you work toward paying off debt.  A little bit of life insurance is always better than none at all.  Once your finances are more secure, if you decide you want to purchase more life insurance this is always an option.  You can either convert your 10-year policy into a permanent policy (if your policy is convertible) or you can purchase a new term policy.

Buy a 10-year term policy if you are close to retirement.

Most of the time term life insurance policies are purchased to cover the most financially-vulnerable years, such as when your children are small and you have quite a few years left on your mortgage loan.  Other times term life insurance policies are purchased to protect financial responsibilities that may crop up later in life, such as the purchase of a vacation home or your adult child’s graduate school tuition.

As an example, let’s say you are 55 years old and you and your spouse pull the trigger and finally buy that dream condo on the ocean.  It will be a great place for your children and grandchildren to visit.  However, one of your children isn’t quite done with graduate school and tuition isn’t decreasing anytime soon.  You have savings, Social Security benefits will be starting soon, and even though you’re healthy, you still want to be sure that if the unexpected happened, your spouse wouldn’t have to sell the condo and your child could finish school.

The Estimated Monthly Cost of a
10-Year Term Policy
for a Healthy, Non-Smoking 55-Year-Old
Coverage Amount Gender
$100,000 Male = $22
Female = $20
$250,000 Male = $42
Female = $32
$300,000 Male = $48
Female = $37
$500,000 Male = $73
Female = $55
$750,000 Male = $107
Female = $80
$1,000,000 Male = $136
Female = $102

Buy a 10-year term policy to supplement your existing life insurance.

Perhaps you planned ahead when you were young and bought life insurance right after your first child.  You locked in a great low premium payment for a 30-year $250,000 term policy.  Perfect.  Your child will be financially protected through her college years and your spouse could pay for your funeral and rent each month.

Now, fifteen years later you’re 40 years old and realize that your $250,000 policy won’t cover your $400,000 mortgage loan.  Instead of applying for a brand new 30-year policy with a $500,000 coverage amount, you can opt to add to your current coverage with a new 10-year policy $250,000 policy.  This will ensure you have an appropriate amount of coverage for the next ten years while you’re paying off your mortgage and through your daughter’s college years – without being over-insured.

Buy a 10-year term policy to protect a loan.

Whether you need to take out a personal or business loan, lenders need to know how you plan on paying back the loan.  They also like a backup plan as assurance that they won’t lose money should you die unexpectedly before the balance is paid in full.  One such option is to assign a term policy as your payment backup should you die.  Lenders will be more inclined to approve your loan if they see you have all intentions of paying it back – even in death.

Interested in a 10-year term life insurance policy?  Finding out how little a policy may cost you is incredibly easy.  Visit CoverageInsure.com/lifeinsurance. – run as many quotes as you want without being required to enter contact information.  We look forward to helping you purchase life insurance.

Why You Might Want Wedding Insurance

If you’re busy planning a wedding, you might want to consider insuring it.

Wedding insurance policies are relatively easy to understand, and the two main types are both inexpensive compared with the cost of a ceremony and reception:

  • Liability insurance covers you in case of an injury or property damage at the wedding. Liquor liability, sometimes a separate coverage, pays out if someone drinks too much and causes an injury or damage.
  • Cancellation coverage reimburses you for costs such as deposits and guests’ airfare if you need to cancel or reschedule the wedding for an unforeseen reason. Unfortunately, that doesn’t include a change of heart.

The most common wedding cancellation claims involve:

  • A vendor, such as a venue or a caterer, going out of business or being otherwise unable to fulfill its agreement.
  • Extreme weather, such as a hurricane or tornado.
  • A member of the bridal party or family being too injured or ill to participate.

Costs

Cancellation and liability coverage are sold separately. Prices are based on the number of guests or the wedding’s price tag, depending on the insurer, but each can cost under $200 for a wedding with fewer than 50 guests.

How to buy it

You can buy wedding insurance through an event insurer, such as Wedsafe or WedSure, or large insurers such as Travelers Insurance. Some insurers sell “event insurance,” which can also cover a wedding. Ask your agent if your current insurer has any options.

Life Insurance for Business Owners

Are you a small business owner or a co-owner of a company? Among the many days to day responsibilities you encounter, you also are responsible for your family. You need to protect your family at home as well as your business family.

Life Insurance for Business Owners

Life insurance for business owners can help lay a proper financial foundation by protecting your current and future business. Let’s look into the different situations that life insurance can benefit your company or business.

Collateral Assignment Life Insurance

A life insurance policy can be used for business owners that require cash to begin a business or buy a company. Typically, when you buy a life insurance policy you will name a beneficiary. This beneficiary has an insurable interest to the insured. This beneficiary can be a family member, spouse or a business partner or company. When you’re getting a life insurance policy for an SBA loan or bank loan – it is the same overall concept. You have to assign a primary beneficiary, however- the lender will be named the collateral assignee. If you were to die the lender will get the balance of the loan from the life insurance death benefit. Your primary beneficiary will then get the balance once the loan is paid off.

What would happen in the event that you didn’t use a collateral assignment? If you had the lender the sole beneficiary, the lender would then collect one hundred percent of the life insurance policy’s death benefit. CoverageInsure life insurance can help you avoid that.

Executive Bonus Plan Life Insurance

With an executive bonus plan, you’re using a compensating method for specific employees by paying the life insurance policy premiums on the key employee’s life. The employer or business owner will pay for a benefit that is owned by the executive or employee. There are benefits to both the employer and employee when it comes to Executive bonus plans.

For the employer, there is no administration needed, the plan is simple, and costs are tax deductible. For the employee, the executive is the owner of the life insurance policy and of the cash values. The policy is not lost if they were to change employers. The death benefit can be income tax free.

Key Person Life Insurance

The purpose of key person life insurance is pretty basic:

A company buys a life insurance policy on a key employee, business owner or executive who is very important to the business. The company will apply for a life insurance policy, pay for all of the premiums and own the policy. The business is also the beneficiary of the life insurance policy. If the key person were to die, the company will receive the death benefit of the key person. The tax-free benefit can be used in a variety of ways. It can help make up for company sales as well as lost earnings. The benefit can also help cover some or all of the costs of finding a good replacement and provide proper training.

What would happen if the key person were to die unexpectedly? Could your business move forward without a hiccup? The life insurance death benefit can provide liquidity quickly so you can provide ongoing financial demands.

How about securing loans for your company’s growth? Sometimes loans are needed to help with the financing opportunities of expanding a business. Your lender will often seek collateral as security and the death of a key employee may pose too much of a risk to your lender. It is very common for a lender or bank to require key person life insurance on anyone that is vital to the life of your company.

One of the most important uses of key person life insurance is when there’s a need to buy out a deceased co-owner's interest in a company. There are some unfortunate situations that can arise if a key person policy isn’t in place. How would the deceased co-owner's family receive their share of the interest in the business without selling it off? How would the surviving owners pay off the dead owner’s family in order to avoid becoming partners with them?

Buy Sell Agreement with Life Insurance

When you’re an owner of a company or a partner in a business, a buy sell agreement can be an excellent way to avoid uncertainty. When a partner or company owner dies, the life of the business and it’s future are uncertain. With a buy-sell agreement, you can make sure you’re helping to protect you and your company from the unexpected or unintended transfer of ownership. By considering a buy sell agreement and funding it with life insurance, you can provide protection and extend the life of your company.

The buy sell agreement will aid the sale and purchase of a company based on a specified event. The most common events are retirement, disability or death of the owner of the company. The buy-sell will lay out specifically who will get what with regards to shares of the business. It will define how much and it will guarantee the buyer at a predetermined price. The buy-sell agreement also allows for the purchasing of company shares from the estate of the surviving family. Lastly, a buy-sell can be beneficial with creditors. Creditors will most likely be much easier to deal with when they can see that a company has protection established to make the loan decisions easier.

Business Succession Planning

Life insurance plays an important role as the driving force in succession planning. It is key that you have adequate coverage for you and your business partners. You need to get a formal valuation of your company and make sure that your coverage is updated with the growth of your company. Succession planning is a very important topic and can be vital to your business. If you let the estate plan dictate how your company transitions, it may cause significant issues. There are many companies that have had disastrous results due to poorly designed succession plans. Just ask the Robbie family and the Miami Dolphins.

Get Started

If you’re ready to get started, make sure you work with the following 3 resources:

  • Attorney
  • CPA
  • Life Insurance Broker

You’ll need experts in each of these areas in order to secure the best strategy and policy for your business succession plan.

How to Get Quotes and Apply

Once your plan is in place you can begin shopping for your life insurance policy. Simply use the free quoter on this page to get an idea of rates.

However, the best way to secure coverage is to have our research customized quotes. You can simply contact us at CoverageInsure.com.  We’re independent and licensed life insurance agents. We’ll find you the best policy at the most competitive price from dozens of top rated life insurance companies. Once we find you the lowest rate, we’ll help you apply conveniently online or over the phone. We’ll help you from start to finish.