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3 Tips for Building the Perfect Term Life Insurance Policy

If you have no idea how much life insurance you need, you’re not alone.  Most people have no clue how much life insurance or what type of life insurance they need. Term life insurance is designed to protect your family and loved ones in the event of your untimely passing. To get the right life insurance policy to protect your family, it is important to understand how term life insurance works and how your other financial resources can work together with life insurance to create a safety net and protect the ones you love most.

How Term Life Insurance Works

Life insurance comes in two primary types: term life insurance and permanent life insurance, such as Whole Life or Universal Life. Permanent life insurance is comparatively much more expensive, so today we will focus on term life insurance.
Term life insurance is life insurance that covers the insured individual for a specific period of time. If the insured dies at any time during the term, the entire policy value is paid out to the named beneficiaries. At the end of the initial term period (typically 10, 15, 20, 25, 30 year term period), the term life insurance policy premiums increase annually thereafter.
Because the chances of death are much less over the short term and at younger ages, life insurance companies are able to offer much lower rates for term life insurance than for permanent types of life insurance coverage.
The rates you pay will be largely determined by your age and present health. However, should your health change, you could find yourself paying a higher rate or find that coverage is unavailable other than for a simplified issue, guaranteed issue or accidental death policy. But because a change in your health won’t affect policy premiums on a current life insurance policy, it’s, therefore, best to purchase a policy when you’re still healthy.

Cover Yourself for the Short-Term

Term life insurance is designed to be used over a limited period of time, usually 10 to 30 years.
In the short-term, your family’s financial needs may only be covered by savings and investments. Some employers may offer group life insurance to their employees at a discount as a benefit, but although this type of coverage is typically automatic, it’s often limited in face value and is valid only as long as you’re employed – meaning an outside term life policy is still recommended.

Life Insurance Covers the Medium-Term

If your life insurance needs are between 10 to 30 years, term life insurance is an ideal vehicle to help cover your family. Most people do not have a large enough nest egg of savings and investments to cover the needs of their family for the long-term, which is why term life insurance exists and why it can be such a powerful financial tool. Often times, getting approved can take as little as a few weeks to a month, and temporary coverage is usually offered during the underwriting of your insurance policy.
It is best to choose a term length and face amount that will cover your family’s needs until they will be financially able to rely on other savings and income, such as retirement accounts or other investments.
For example, you might choose a 30-year term life insurance policy because that may cover your family until you are near retirement age, especially if you are younger, have a mortgage or want to provide for your children’s college education. Your financial needs may change with time, so you may only need a shorter term policy the closer you are to retirement or when your financial obligations have decreased. If you expect that to happen in ten years, consider a ten-year term. If you expect it to take 20 or 30 years, choosing a long-term life insurance plan may make sense.

Savings Covers the Long-Term

Life insurance should be a part of any personal finance plan. In the short-term, an emergency fund can cover immediate needs. In the medium term, you should be saving and investing for retirement. Once you reach retirement, you should have enough savings and investments in place that term life insurance is potentially no longer needed. 
Apply for Term Life Insurance Today!
Applying for term life insurance is easy. You can get competitive quotes from multiple insurance carriers after filling out an easy, no obligation quote request. You’ll have your family protected in no time so you can rest easy at work, at home or wherever the adventures of life take you.
Your family’s financial security is too important to leave to chance.
Rather than applying a whole lot of times to different life insurance companies, you can get competitive quotes from multiple insurers with one simple no obligation questionnaire through SelectQuote. It only takes a few minutes to find your rate. What are you waiting for? Find out your rate today!
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  1. This is soOOoo important, and a great article. Thanks for this easy read for anyone interested in term life insurance.

  2. I didn’t realize that there was a type of insurance that only covered you for a short period of time. I can see how making sure you get the insurance you need is important as well as understanding what the coverage is. I understand that having life insurance is important because you never know what life will bring and making sure you expect the unexpected is always a good thing.

  3. My brother needs life insurance, and asked me to do research online to learn more about it. In the blog it states that short term plans are good for people who think that their financial needs might change. Who knows where my brother might be in 10-20 years, so I’ll recommend he find a life insurance provider professional, and talk to them about that option. Thanks for the blog.

  4. I really appreciate the insight here in this post and confident it’s going to be helpful to me and many others. I’m wondering if you or anyone else has additional sources for me to read further and to be able to dig a little deeper?

  5. I am finally old enough to start paying for my own life insurance and I am not quite sure how to do it right. You mentioned that it helps to cover yourself for the short term which is usually a 10 to 30 year time period. That is a great plan since your family financial needs may be only covered by savings and investments. Thanks for the great tip about life insurance.

  6. I liked that you had mentioned that it can be important to cover yourself for short term and long term when it comes to life insurance. My wife has been worried that I don’t have life insurance because she doesn’t know what the family would do to get by without me. We’ll have to start looking for a life insurance company and once we find one, I’ll be making sure that I can be covered for the short term and long term side of things.

    • Rachel Spear

      Hi Roger. SelectQuote offers life insurance. Give one of our agents a call at 888-279-6192 when you’re ready and we’ll help you figure out the best coverage for your needs. Happy Holidays!

  7. Insurance can be a complicated route to navigate alone, especially life insurance. I like how you spoke to the fact that it doesn’t have to be as daunting as you think and that it’s important to cover yourself when especially when you have an employee discount at work. If I ever need additional coverage I will consult with a professional to get more!

    • Rachel Spear

      Thanks for taking the time to comment, Jordan. You hit the nail on the head – with a little guidance from professionals something seemingly complex can be quite manageable. Happy to assist you anytime!

  8. I like how you pointed out that most people have no clue how much life insurance or what type of life insurance they need. My husband and I are both pretty clueless when it comes to insurance, but we know it’s important to be covered, and we want to find the right plan for us. I think it would be best if we spoke with a professional to learn about the different types and plans that we could benefit from.

  9. I didn’t know life insurance came in two types. Both term life insurance and permanent life insurance sound useful. I’m starting to get older, so I’m thinking about looking into life insurance to take care of my family when I’m gone.

  10. That’s good to know that term life insurance generally lasts between 10 to 30 years. My husband and I have decided that it’s time for us to be more grown up and get coverage. Your article will help us find the right life insurance for us.

    • Rachel Spear

      Great to hear Amanda. You’ll be really happy you did. We’re here to help you find the right plan so give us a call anytime!

  11. I never knew that some employees offer life insurance as a benefit. My wife and I have been trying to find new jobs now that we are newlywed and living out on our own. I will be sure to look for a company that offers life insurance!