What is term life insurance? Why should you buy that instead of whole life insurance? Your Baldwin Woodville agent will be happy to discuss term life insurance in Wisconsin or Minnesota with you, but here we’ll answer some of the most basic questions about this type of life insurance.
Term life insurance has a limited period of coverage. When the term of the insurance ends, you then decide to renew it, to change the coverage of the new policy, or to choose a different type of life insurance policy. Whole life insurance is something you pay into for your whole life, as opposed to a specific term.
Why Choose Term Life Insurance?
- First, you can receive a higher death benefit, while paying the lowest
premium, compared to whole life coverage. Of course, if you don’t die before the term ends, it may feel like you paid all that money for nothing. This may be the only case where you feel like you “lose out” by remaining alive. - On the other hand, if you have temporary life insurance needs, for less than 10 years, term life insurance is the best choice. A general rule of thumb is, if you are under the age of 45, term life insurance is the best value.
- Term life insurance is also flexible. You can convert it into whole life insurance if you decide that is the best choice. Working closely with your Baldwin Woodville agent will help you know if and when this change is a good idea.
- Additionally, you can add different types of term life insurance, such as level, increasing, or decreasing, as a rider to other insurance policies.
- One of the biggest benefits of term life insurance is that the way it’s set up, the beneficiary can be paid without delays that would otherwise be faced during the administration of the estate, and the beneficiary will not have to pay federal income tax or state inheritance taxes on the benefit.
- Term insurance can be used in some cases as collateral for personal loans, the same as permanent policies.
Is Term Life Insurance Right For Me?
With all these benefits in mind, each person has to make sure they purchase the life insurance policy that is best for them. You can get some idea from the tips above as to whether it is right for you, but the only way to be really sure is to discuss it with your family and your agent.
At Baldwin Woodville, we’re always happy to help you wade through the choices and pick the right product for your life insurance needs.