The Cost Of Term Life Insurance
Do you think buying life insurance is unnecessary, even if it is term life insurance?
Let's look at the following situation:
John is the sole provider for his family; he doesn’t have term life insurance, or whole life insurance. He thinks he can’t afford term life insurance. He is self employed, and earns approximately $45,000 a year. His wife works part time and brings in close to $7000. She doesn’t have term life insurance either. They own a home for which they are making monthly payments of about $1,200 a month. Suddenly John has an accident and dies. His wife not only has to deal with his death but with making the car payments, house payments and raising their two children. She finds herself in a desperate situation.
Faced with the above situation how can you afford not to have even term life insurance? There are two types of insurance, term life insurance and whole life, life insurance. If you are in the age bracket between 20 and 40 and self employed or not covered for life insurance by your employer, then the best option for you is term life insurance. Term life insurance is fairly inexpensive paying only a few cents on the dollar and is generally affordable for most people.
Why Term and not Whole Life Insurance.
Let’s say you are a 40 year old non smoker and you are given a choice of purchasing a whole live policy with and annual premium of $3,000. You can find the same amount of coverage in a term life insurance policy with an annual premium of $350.The difference insurance companies say is that the whole life insurance policy is an investment, sort of like a savings account. The problem is that, the whole life policy won’t produce anything for several years. In fact it won’t produce anything for about 12 years, and if you need to cash in before then, you’ll probably end up losing a lot of money.
Precautions When Buying Term Life Insurance
The only precaution you need to be worried about with term life insurance, is keeping your premiums down for a number of years. So, if you want to keep your term life insurance premiums relatively fixed for 20 to 30 years, you need to look for a company that is very dependable and you want to make sure the term life insurance company is going to be around for awhile. Check the term life insurance company for credit worthiness. You can generally do this online for free. Look for companies that are A rated or AA rated is even better.