what is the reason behind buying term life insurance? is affordability the only factor behind the purchase of term life insuranc
Posted Nov 30 2010 5:11am
< p> Affordability is a relative term because not necessary that if a particular thing is affordable for one person then that is affordable for the other also. Many may find a universal life insurance plan with large face value quite affordable while for others it might be something so expensive that they will not even think about it. But in general a term life insurance policy is quite affordable. Though the rates are low but the face value is quite high and the motive behind buying a term life is to receive coverage at affordable rates. And in case you are planning to buy this policy in the older age like initial 60’s then you need to know the fact that the policy will turn out to be very expensive.
However, before we talk about affordable life insurance, we must try to understand why we want to buy a policy in the first place. We should keep in mind that there are different kinds of policies, each suitable for a typical requirement. We must buy an affordable life insurance policy because unless it is affordable, we may be forced to give it up at some point of time. However, that should not make affordability the only criterion while choosing a life insurance policy. It must meet our requirements too.
Usually a person decides to buy a policy only after reaching a particular stage of life that is either when he gets a job, or when he gets married, has a child, or buys a house. No matter how affordable the term policy sounds a person should never go for it if he has no dependants. The reason for this is very simple, these policies do not have any cash value and will yield the benefit only if the insured dies.
Such a person should put his money in an investment policy that will give high return and help him to build up his assets. Such policies may have high rates, but since he has no liability, it should not be unaffordable for him. He can also buy a Limited-Pay life insurance policy, in which all premiums are paid over during the first few years, so that he can remain covered without actually paying when he has family to take care of.
Therefore, you should consider many factors other than affordability, although affordability should be one of the main issues that you should look into before choosing a life insurance plan. The term life is the most affordable life insurance policy if you buy it when you are still young and healthy. A term life insurance will see to it that your family will live comfortably even if you die a premature death. Remain covered by term life until you are sixty-five, if you are smart, you will not need the coverage for a longer term. However, if you want to take some loan against your policy, a term life will not be of any help. A whole life insurance policy will come to your aid in such a case.
Though not as affordable as term life insurance policy but the whole life insurance policy is also quite affordable, at least more affordable than a universal or variable life insurance policy. It is a good combination of cash value and death benefit. This provides the coverage for the complete life span of the person and the benefits can be availed whenever the insured dies. Although a whole life costs more than a term life, if you talk in terms of affordability, it is not really unaffordable.
If protection of the family is the main concern why you are looking forward to buy an insurance policy then term policy is the best choice it will not help you to build your assets, but it will take care of certain things if you die all of a sudden, like:
The lost income is replaced and your family will not have to worry about the next grocery bill.
They can maintain their lifestyle.
Children do not need to skip collage due to lack of funds.
The mortgages are paid on time so that the family can keep the roof over their head.
The assets do not have to be sold to pay for the inheritance tax.
Funeral expenses or medical bills not covered by insurance are met up.
All these things could be secured by buying a term life insurance policy. Yes, all other life insurance policies will also secure that. What matters is the age when you buy the policy, like if you are within thirty-five, you can do that with less than $40 a month. Just think about it, is there any other policy that will be offered to you at this rate? To qualify for such low rates you also need to be healthy and non – smoker. If you use tobacco in any form, have certain medical condition or are on the wrong side of fifty it will be difficult for you to get affordable life insurance as you will be subjected to higher premiums.