You are a healthy young adult making sound financial choices. With a wonderful spouse and the thoughts of having children one day, you want to make sure all the people you love will be taken care of if your life ends due to accident or illness.
Then the day comes when a friend mentions getting life insurance. Instead of dismissing the conversation, you give the topic serious consideration. This could be the answer to give your family the benefits to help offset funeral costs and to help protect them financially into the future.
Term Life Insurance Is the Best Bet for Young Professionals
You’ll often hear about two types of insurance products: term life and whole life.
- Term life is the most basic type of insurance. When you die, your beneficiaries receive the face amount of the policy. Policy terms are available for 5 years up to 30 years.
- Whole life is both a life insurance policy and an investment product that can involve stocks, bonds or money-market instruments. You can build cash value on a whole life policy that you borrow against.
You have many reasons to choose a term life insurance policy over other types of insurance products.
- It’s more affordable. Term life insurance is cheaper than other types of policies you can get because you aren’t getting the investment option. You’re strictly getting a life insurance policy.
- It’s geared to younger policyholders. Term life is suited for anyone under the age of 50 who is in good health.
- Monthly payments are locked in. Some insurance companies will lock in payments so your premiums won’t change for a number of years. This option allows you to budget your finances better. You can choose to have the premiums increase per year.
- You can get a policy with less than a 10-year term. If you want life insurance for only a certain length of time, term life is the best option. You can get policies with a term period as low as one year — a good option if you are traveling for business or your job involves dangerous work for a short period of time.
- Term life insurance is renewable. If you want to continue the life insurance policy past the stated term, you can renew the policy or convert it to a cash-value life policy.
Term life insurance is suited for you if you are in good health and have beneficiaries who would suffer financially if you are no longer around. Depending on the insurance company, you may have to prove every few years that your health continues to be in good shape to keep the low premium rates you have. This is often referred to as re-entry ages. Smoking, drinking, obesity or other wellness conditions may prevent you from getting term life insurance or may cause you to pay higher premiums.
In addition to the life insurance policy, an insurance company will offer additional benefits called riders. Riders are add-ons that give you special coverage during certain circumstances – if, for instance, your health worsens to the point where you need home care, you can get a long-term care rider. Or if you become permanently disabled, you can get a waiver of premium rider.
Try to avoid riders that you really don’t need, as it will only increase the amount of your monthly payments. Remember, you are trying to get the best life insurance for your budget.
Life insurance is available for you even if you have a limited budget. Look into the benefits of term life insurance and get the best rates and coverage for your growing family. You know you will have provided for them in the best manner if something happens in the future where you are no longer around.