If life were perfect, we would all pass away from old age in our sleep surrounded by our loved ones. Those we left behind would mourn our death and then move forward living their lives.
Unfortunately, life is never quite that simple. An unexpected and sudden death of a loved one can shatter our lives in ways we never could even expect.
While we can’t protect ourselves against everything, there are some steps we can take. One way is to buy term life insurance. Life insurance isn’t something most people like to think about, but it has a number of advantages especially term life insurance.
Keep reading to find out the top 1o reasons why you should buy term life insurance.
#1. Versatile in Covering Insurance Needs
Term life insurance has easily become one of the most popular purchased life insurance options available. It’s also the #1 recommended life insurance choice by highly respectable financial gurus such as Dave Ramsey, Suze Orman and Clark Howard.
So why is term life insurance so popular?
Well, one reason is its affordability, which we will touch up shortly, but the main reason is its versatility to work in covering just about all life insurance needs.
Many people buy term life insurance because it covers expenses that many families need help with should their loved one pass away. These expenses could include one or even all of the following needs for life insurance.
- Replace lost income
- Paying mortgage payments or payoff
- Cover burial expenses
- Payoff outstanding debts
- Provide funds for college
- Funds to pay estate taxes
- Medical bills
- Peace of mind
Term life insurance should also not be mistaken as a type life insurance for just families. A term life insurance policy can work extremely well in many business settings. A few examples in which a business could utilize a term life insurance could be one or more of the following situations.
- Approval for a business loan
- Covering a key employee
- Setting up a buy-sell agreement
- Part of an employee benefit package
As you can see because of its versatility, term life insurance can be a perfect fit in more than just a few circumstances making it the preferred choice of life insurance coverage for many.
#2. It’s Affordable
Another major reason why most people prefer to buy term life insurance is due to its affordability. In fact, term life insurance is the most affordable type of life insurance compared to all the other life insurance options.
If you compare a permanent life insurance quote such as universal or whole life insurance to term life insurance quote, you’ll see that there is quite a large difference in the rate, setting them far apart from each other.
This is mostly due to the fact that term insurance is considered temporary coverage and will eventually end whereas universal and whole life insurance are guaranteed to remain active for an entire lifetime.
Permanent life insurance has many purposes and can be a valuable coverage option if insurance needs call for it.
Let’s take a look some rate comparisons between term, universal and whole life insurance coverage
Example: Healthy 35 year old non-smoker male seeking $1,000,000 of life insurance coverage.
Term Life Insurance (10 Year):
Universal Life Insurance:
Whole Life Insurance:
Example: Healthy 45 year old non-smoker female seeking $500,000 of life insurance coverage.
Term Life Insurance (10 Year):
Universal Life Insurance:
Whole Life Insurance:
Example: Healthy 65 year old non-smoker male seeking $100,000 of life insurance coverage.
Term Life Insurance (10 Year):
Universal Life Insurance:
Whole Life Insurance:
#3. Several Available Contract Lengths
Our third reason as to why you should buy term life insurance is because of its several available contract lengths. Term life insurance policies are temporary contracts the can last anywhere from 1, 10, 15, 20, 25 and even 30 years long.
With so many available contract lengths to choose from, it makes tailoring a plan around specific life insurance needs much more easier.
For example, one of the most popular reasons people buy term life insurance is to make sure their spouse is able to keep paying or even payoff a mortgage balance should either pass away.
Let’s say there is 30 years left on mortgage. A good term length would be a 30-year policy. This allows for coverage to last equal to the end of the mortgage length.
Another example could be someone who might be 55 years old who is planning on retiring in the next 10 years. A good term contact in this situation could be the 10-year contract allowing for coverage during the last few working years.
It should also be noted that during your contract length, premiums are generally locked in for that chosen time frame. So if you were to purchase a 20-year term life insurance policy premiums would be guaranteed to remain the same price until after the 20th policy year.
After the term length expires most plans will allow you to continue paying at an increase rate or even allow for you to switch out your policy for a permanent one without evidence of insurability. This is what is known as a conversion that will be discussed a little further in the article.
#4. You Can Buy Term Life Insurance without an Exam
One of the greatest and more recently added features to term life insurance is the option to skip the medical exam. This is commonly referred to as no medical exam term life insurance.
Normally when you apply for a life insurance policy you would be required to undergo a medical exam that is provided by the insurance company.
This exam usually takes about 30-45 minutes and would include several questions about your medical history along with blood pressure readings, height, weight check, blood and urinalysis sample. In some cases even an EKG reading for policies over a million dollars.
The entire exam is done at the comfort of your home or even work place if desired. Although this is still the common way to apply for coverage and is still utilized for most life insurance policies today, there are new options to opt out the entire physical.
Within the last several years, several life insurance companies have been able to utilize other efficient underwriting tools to eliminate the entire exam process completely.
#5. You can get it Fast
Need to buy term life insurance coverage fast? With accelerated underwriting you could be approved for a new term life insurance policy in as little as 24 hours, sometimes faster!
Accelerated underwriting goes hand in hand with no medical exam underwriting, as it also doesn’t require you to take a physical. Both use all the same underwriting features with the only big difference being the quickness of approval times.
Who can benefit from accelerated underwriting?
Accelerated underwriting can be best for those in excellent health. This is not to say you cannot apply for accelerated underwriting if you have minor health concerns. Those however in excellent health will see faster results in approval times when applying.
Most life insurance companies that offer an accelerated underwriting process generally have a maximum coverage amount of $500,000 with a handful offering up to $1,000,000 coverage.
The entire application process is generally done electronically with approval times often resulting within 24-72 hours.
For those looking for fast life insurance coverage with no medical underwriting, consider accelerated underwriting. Accelerated underwriting is also a preferred choice for businesses that require life insurance for a business loan, as most of those are time sensitive.
#6. It’s Great for Younger People
Millennial’s are the largest generation in human history. Several 20 to 30 year olds are just beginning long-term careers, buying their first house and even starting families. This is now the best time for them to buy term life insurance, as coverage needs are going to soon be at the highest.
Why is term life insurance great for younger people?
It’s highly affordable and it’s never going to be cheaper than right now. What makes it the best choice is that generally enough of it can be purchased to make sure that all needs are covered without breaking the bank.
A young family can often purchase up to 20x their annual income at a low cost. This also means that if needs and obligations increase later, they will still have enough coverage to cover them.
#7. Several Free & Optional Policy Riders
Life insurance has come a very long way from providing just a death benefit in the unfortunate passing of a loved one. Through the use of policy riders, life insurance coverage can provide even an extra layer of protection to the insured as well as the entire family.
There are several different policy riders that exist and each can vary from company to company as to what kind of benefit they can provide. One of the best types of policy riders is what is known as living benefits and several term life insurance policies now offer them free when you buy term life insurance coverage.
A living benefit is generally an advanced cash payout from the policy’s death benefit if a qualified occurrence has happened. Most qualifying occurrences are from the results of being diagnosed with a terminal illness, chronic illness, critical illness or even permanent confinement to a nursing home. At that point of time, if your term life insurance policy offers living benefits, you can request access them.
Living benefits riders are one of many available policy riders. Here is a short list of some of the most common policy riders available with term life insurance coverage.
Accidental Death Rider – Pays out an additional death benefit if death is caused by an accident.
Children’s Term Rider – Provides level term life insurance coverage for each child of the insured. Most companies will allow for the term coverage to be switched to permanent insurance at age 25 without evidence of insurability.
Disability Income Rider – Pays a monthly income if the insured has had a health or accidental injury preventing the insured to perform at his or hers own occupation.
Guaranteed Insurability – Provides the option to add additional coverage to the base policy without any evidence of insurability. The option to add to the life insurance coverage is only available at specific occurrences stated within the policy contract.
Long Term Care Rider – Provides funds to help pay for cost associated with long term care expenses.
Return of Premium Rider – Provides 100% of every premium paid into the life insurance contract at the end of the level premium term length.
Waiver of Premium Rider – Will waive all premiums payments for a specified duration of time should the insured become disabled.
#8. Great Option for Seniors Too
We previously touched on why term life insurance is great for younger people but it can also be just as great for seniors too. Compared to permanent products, term life insurance for seniors can be a much more affordable alternative.
Although life insurance needs tend to dwindle down for most people as they grow older, there are still smaller needs that may require the use of a life insurance policy. Some of these insurance needs can include mortgage balance, financial debt or funds to pay burial & final expenses.
Purchasing a term life insurance policy to cover these smaller insurance needs will still be relatively affordable especially if you do not need a lot of coverage. The great thing about smaller life insurance polices like $100,000 or lower in most cases will not require you to take a physical.
For those that require larger amounts of coverage you can still get it too. In fact, most no exam term life insurance companies offer up to $500,000 of term insurance up to age 65 with no physical needed.
#9. Can Convert to Permanent Life Insurance
A very small concern when it comes to buying term life insurance is the fact that it is temporary life insurance. What is really temporary however is the premium, otherwise known as the cost to continue coverage.
What many people don’t realize is that at the end of the term contract most companies will offer a feature known as a guaranteed conversion. This feature allows for you to switch your term insurance to a permanent life insurance contract that will lock in a new fixed rate that will be good forever.
The guaranteed conversion option is a really great feature to have especially if life insurance needs do become permanent at some point while the term insurance is active.
Most conversions happen when the insured has become diagnosed with a medical issue that will prevent them from qualifying for a new life insurance policy.
It’s important to know that every company offers a different set of rules when it comes to converting a term policy. In most cases companies will require you to convert coverage prior to age 65 with some offering it up to age 70 to 75.
It’s also important to convert coverage at an earlier age if you believe permanent coverage will be needed after the term expires. This is because it will be much cheaper when done at a younger age rather than when your term insurance expires and you are older.
#10. Policies are Very Easy to Understand
Worried that buying a term life insurance policy will be too confusing? There really is no need to be worried. Term life insurance is very simple to understand and doesn’t require any extra work when the policy is active.
When you purchase a term life insurance policy all that is required from the person applying is the application and the medical exam, if one is required.
From there, the policy goes to underwriting to asses your overall risk to the insurance company. Your risk will be given a classification which is what determines your final premium.
Those with no health issues, risky hobbies or activities can receive the best risk classifications resulting in the best premium payments. Those with health conditions, risky hobbies or activities will be given a risk classification based on level of risk those conditions are to the insurance company.
After underwriting has been completed you will be provided with your exact price for the insurance coverage. At that point you will decide whether or not you would like to accept the contract or decline it. You can also make changes if need be. If all goes well you will be approved exactly how quoted prior to the start of the application.
If you accept your policy, the insurance company will issue and print the policy. The policy will include any last signature forms along with a notice of premium due to activate the life insurance coverage.
Your coverage will have a primary beneficiary who is the person that will receive the death benefit should you pass. You can also name a secondary beneficiary know as a contingent beneficiary that is second inline to receive the death benefit should the primary pass away prior to the insured naming a new person.
Term life insurance is very basic with no tricks or confusing verbiage. It pays on all types of death accidental and health related. Premiums will be guaranteed to remain the same for however long you decide to purchase the contract for.
#11. Super Easy to Shop Quote Comparisons
Bonus… We actually thought of one more reason to buy term life insurance. The greatest thing about the Internet and working with an independent agency like Top Quote Life Insurance is how easy we make it to find the best term life insurance rates.
By working with an independent company such as ours, we can provide you with multiple rates from several of the nations best life insurance companies.
We also provide an online quoter on every page of our site that allows for you to quickly run quote comparisons.
As we recently mentioned that term life insurance is very easy to understand, what can be difficult is choosing the right life insurance company. This is where we can be a great help.
Each life insurance company underwrites risks differently and have their own unique niches for specific niches. Since we work with several insurance companies we have a great deal of knowledge on knowing which companies will be most favorable to any specific underwriting concern you may have.
For example, did you know that if you chew tobacco, use cigars or smoke a pipe that we have a few companies that will approve you at non-smoker rates? How about health issues such as diabetes, cholesterol or high blood pressure? We work with those companies that are going to provide you with the best possible rate for those underwriting concerns. Grab some sample quotes, but don’t apply on your own. Let us make sure you are applying with the best company for your own unique circumstances.
Don’t Wait to Buy Term Life Insurance
You’ve finished reading the top 1o, well really 11 reasons to buy term life insurance coverage. If you think it make sense to discuss buying a term life insurance policy on yourself or your family, please don’t delay and reach out to us for help.
You run the risk of paying more the older you get so don’t wait.
To instantly start comparing rates, click here.
Top 10 Best Reasons to Buy Term Life Insurance by Jeffrey Manola