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Purchasing Term Life Insurance: Tips

It is possible that term life insurance is a better option for your needs.  Many individuals choose this dynamic option, capitalising on lower rates and other features.  Perhaps a term life insurance policy is right for your needs – here are some tips that you should make yourself aware of in the buying process.

Look for the Renewable Policies

Isn’t that the biggest drawback – you aren’t guaranteed a particular rate?

Indeed, that can be the case.  A 40-year-old individual might look at life insurance quotes with joy, such as a simple 10-year term life insurance policy.  However, when he or she reaches 60 and 70 years old a few decades later, it won’t be as fun.  He or she might regret purchasing term life insurance, where those low whole life insurance rates could have been locked in “forever.”

Guaranteed renewable term policies do exist and can be well worth the trouble of finding.  These policies occupy a “hybrid” status, where you can choose to renew your current 10-year term policy, for instance, when it ends at the same rate.  It is the best of both worlds, but tread carefully and look at its terms – you know the saying with something sounding too good to be true.

The Catch-22 with Length of the Term

Purchase a shorter term life insurance policy and get a lower rate; opt for a longer term and you’ll surely pay higher premiums.

Looking at common terms of term life insurance policies, it can be a difficult decision.  Lower terms, such as a 10-year policy for instance, might allow you to get a nice rate and give your budget some breathing room; 10 years is a long time, after all.  Of course, those spanning up to 30 and 40 years can offer peace of mind; the difference in rate might be worth the trouble and stress.

If you budget can allow the latter, you might have an easy decision.  Others may accept the risk in the former case.  This is something that you must ponder and integrate into your specific needs, which leads us into the next section…

Changing Needs?

Of course, it is almost cliché to point out your needs with an insurance product.  We won’t go that far – as there are plenty of articles that familiarly bear that phrase – but we reach an interesting point as we return to our discussion.

Term life insurance allows for an interesting possibility, in that your needs for life insurance will change.  Consider the 40-year-old individual, who we’ll make into a husband and father of two children.  He might lock in a great rate for the next 10 or 20 years, but at a higher amount.

However, what happens when he is 60 years old?  There may be fewer debts, items might be past being paid off, and the children might be on their own.  No, he won’t need that large amount at the short term any longer.  It may be much more manageable with a lower amount.

Keep some of these ideas in mind.  Perhaps term life insurance is the right choice for your needs.

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