Sunbeam Tip #2: Why Term Life Insurance is good

Sunbeam Tip #2: Why Term Life Insurance is good.

Last week, we talked about picking the right “Tool” for the the job of protecting your family.  This week’s tip focuses on the positives of “Term” life insurance.  There are negatives, but we will save that for next week.  So here it is:

  1. It is cheap!  There are clear exceptions to how “cheap” it is but, holding everything equal, when compared to a whole life product, Term will always be cheaper, as of the date of quote.  Term life is used to cover the need for higher payouts for such things as a mortgage, college tuition for the kids or replacing the income of the deceased.
  2. Easy to obtain through your employer.  If you want a term policy, the cheapest, easiest way to get covered is through your job.  Usually capped at a multiple of your salary, getting a group term policy can be as easy as applying a check mark at the time of enrollment into your benefits.  There are drawbacks to group coverage but only positives today!
  3. It lasts for a specific period of time.  This last one can be good or bad depending on your situation, there are many instances where you’ll use a cheap term policy to cover a particular situation and you don’t want to be married to the product for the rest of your life.  Some of these situations include:  Covering the kids until they graduate, business dealings where you need your partner covered for a certain period.  Another type of term policy called “Decreasing Term” will cover the mortgage of your home and disappear once you’ve paid off the note.

Lessons Learned:

A term policy, for the most part, is easy to obtain, very low cost and has good versatility for various situations.  Term policies should be used when there is a specified period of time under consideration and/or there is a large dollar amount needed at redemption.