How to Buy Term Life Insurance Policies

There are many different types of insurance policies to protect against a wide variety of risks.  Term life insurance policies are a great way for those insured to get the maximum amount of policy coverage for the lowest premium amount.  A few simple simple considerations will help guide you in getting appropriate coverage in place.

Term life insurance, and whole life insurance, are the two main types of insurance policies available to consumers today.  A term policy is valid for a specified period of time, the most common term period is 20 years.  If the policyholder dies within the specified term, the beneficiary receives the benefit amount, otherwise, the policy expires.  Term life insurance tends to provide the most insurance coverage per premium dollar.  So, if you are on a budget, young, and in relatively good health, a term life insurance policy is preferable over whole life.   Keep some considerations in mind when purchasing your term policy.

• Determine the appropriate coverage amount for you and your family.  Most financial analysts will recommend a generalized number such as ten times your annual income as being sufficient.  Another good rule of thumb is to have about $125,000 of term coverage in place for every $1,000 per month in income you would need to replace.  In determining the right amount of coverage, consider any life insurance your employer may have for you.


• Consider the term period.  A shorter term will mean a lower premium.  This is because the insurance company takes on less risk with a shorter period.  The risk becomes the insured’s however, because at the end of the term, the policyholder must get a new policy in place or go without coverage.  The risk is that a health condition or other consideration can increase the premium, or make getting new coverage in place very difficult.


• Consider the policy type.  With term life insurance, keep in mind during the process that the only circumstance under which you will recover your premiums is in the event of your death during the policy term.  Term life insurance policies do not accrue cash value and it is not considered an investment.