A recent study showed that the number of people with life insurance coverage continues to drop. Over 40 percent of adults admit that they do not own a policy. The same study showed that many families admit that they would face serious financial issues if the main financial provider for the family passed away. During these uncertain times, life insurance is more important than ever before. Despite the importance of life insurance, thousands of people don’t have coverage because life insurance policies continue to become more expensive. As you weigh your options, consider term life insurance. Here is a guide to help you buy term life insurance.
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Term Life Insurance Explained
Term life insurance policies allow your benefits to go to a beneficiary in the event of your passing. However, if you are still alive at the end of the policy period, then you will not be able to pass your benefits on to your beneficiary.
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Why Is Term Life Insurance an Asset
Just like most different types of life insurance, term life insurance is designed to cover the risks if you pass away. Term life policies are cheaper compared to other types of life insurance. Term life provides a large sum at a lower price. If you were to pass away tragically, the policy could help your family avoid potential debt. Because there are multiple variations of term life policies available, you must do some research to find the policy that aligns with your needs. The most important thing is being able to cover the risks in case of an emergency. Being able to cover the risks associated with your loss is more important than reaching a maturity date.
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Figure Out How Much Coverage You Need
Your term life policy should assess your family’s financial situation in the event of your untimely passing. To ensure that you will get the coverage that you need, take an estimate of your dependent family’s monthly expenses heading into the future. Next, take note of your liabilities. Deduct any stocks and bonds that you have. Add your future expenses for life goals you plan to accomplish in the future. This could be getting married, starting a family, or purchasing a house. You’ll also have to look at the amount of money you need to feel comfortable retiring. All of these different factors can help you determine the amount of coverage you need.
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Look for The Highest Peace Of Mind
When choosing a term life insurance plan, think about the stability and reputation of the policyholder. Term life insurance is a form of a long-term contract. You need to have confidence in the plan that you choose. Make sure that you are happy with your provider and the premium you’ll pay before making a decision.
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Figure Out the Tenure
As you go through the process of choosing your term insurance, you’ll have to figure out how much coverage you need and the period that you plan to keep the coverage. You don’t want the policy to lapse before your financial goals are met. You also don’t want an extensive tenure because a long tenure means you’ll have to pay a high premium. Calculate your liquid net worth. As long as your assets and liabilities are even, you need coverage. Once your assets have exceeded your liabilities, you should be comfortable.
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Check the Claim Settlement Ratio
The Claim Settlement Ratio involves the efficiency at which the insurance company settles different policies. Ideally, a company’s Claim Settlement Ratio should be in the high 90s. That means that they are very efficient in regards to settling claims.
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Average Claim Amount
After you have a chance to check a company’s Claim Settlement Ratio, check their average claim amount. This can help you find out more information about a company if you still have questions. Settling a high percentage of claims is great, but it’s also good to settle them for a reasonable amount.
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Think About Your Add-Ons
You have the option to add on to your term life policy at a reasonable cost. You can add coverage for accidental death. If you have a terminal illness, you can add coverage so that you will be paid a lump sum amount. If you become permanently disabled, you can exercise a clause that waives future disability payments. This clause also applies if you are diagnosed with a critical illness.
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Company Age
The age of the insurance company is important because it can give you confidence that your policy will be secure over the long run. Look for insurance companies with a track record of at least 10 years of success.
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Premiums
Check the average premiums for each company’s term life policy. This should help you figure out which policies are in your price range.
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Convertible Policies
Convertible term life insurance allows you to exchange your policy for another one of equal value. The transition process is smooth, as you don’t have to undergo a medical exam. However, your premiums may be a little more expensive, depending on your age. You have the option to convert your policy until you turn 65. The conversion period should be shorter than the period of coverage.
Term life insurance policies can help you protect your loved ones and take some pressure off of them as they cope with your passing. Contact the experts at The Reardon Agency to help you through the process of finding the right coverage. We are ready to help you with all your coverage needs.
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