Term Life Insurance In Brooklyn: The Simple Truth
The simple truth about life is that it is inherently unpredictable.
You never know what could happen next.
As for the Ellis family, they used to laugh whenever their friends mentioned life insurance.
‘We’ll think about that later,’ they would say dismissively.
They were young and healthy, and life felt full. Nothing else seemed to matter.
However, just a year later, that same familiar comfort was gone.
On a quiet Sunday morning, Dave was involved in a tragic accident on his way to work.
Dave’s wife, a stay-at-home mom, was left devastated.
Her mind ran endlessly; how was she going to afford funeral costs, the mortgage and bills, or manage to put her kids through college?
And this is exactly the kind of situation life insurance is designed to avoid.
In simple words, Life insurance takes care of those who rely on you.
There are two types of Life Insurance:
Term Life Insurance
Whole or Permanent Life Insurance
However, for this blog, we will mainly focus on 'Term Life Insurance.'
But, if you wish to learn more about whole life insurance, check out our blog on Are Whole Life Insurance Polices Worth The Cost?
Life is full of unexpected surprises. Be ready!
Term Life Insurance
The Basics
Term life insurance provides coverage for a set period, known as a term, offering a death benefit to your beneficiaries.
Hence the name “Term” life insurance.
It’s that simple.
Usually, the term ranges from 10, 20 or even more than 30 years. The decision of how long you want your term to last is solely based on your financial status.
Think of term life insurance as a contract.
It is a simple agreement between you and the insurance company. During this term, you pay a consistent monthly or annual payment (premium) to keep the policy active.
If you (the insured) pass away while the policy is active, your beneficiaries (loved ones) receive a tax-free payout known as a death benefit.
However, keep in mind that, unlike whole life insurance, term life insurance doesn’t build cash value. Its sole purpose is to provide temporary financial protection to you and your family in the most cost-effective way. If the term ends, the coverage expires with no cash paid out.
To put this into perspective, say you bought a 30-year term life policy at age 20 for $500,000 coverage.
If you pass away at the age of 40, your family gets $500,000.
If you live past 50, the policy ends, and no money is paid out.
Benefits of Term Life Insurance
Besides being simple to understand, the benefits go far beyond.
1. Affordability
One of the most significant advantages of term life insurance is its affordability. And, since it doesn’t build cash value, the premiums tend to be significantly lower than those of whole or permanent life insurance.
2. High Coverage Amounts
Term life insurance can secure a huge coverage amount relative to the premiums you pay. Whether it’s to cover debts, pay off a mortgage, or fund your children’s education, term life insurance serves as the perfect financial buffer for your loved ones.
3. Flexibility
You can choose your own term length for the policy depending on what aligns best with your financial situation and personal needs. If you have young children, selecting a policy of 20 years or more can ensure they are protected until they reach adulthood.
4. Fixed payments
Payments remain the same for the duration of the policy's term, allowing a person to easily plan it into a monthly or annual budget without stressing over additional costs.
5. Simplicity
The simplicity of term life insurance is what makes it appealing to many families. It is easy to understand and manage, especially for first-time buyers.
Term Life Insurance Doesn’t Have to Be Complicated
How to Get Term Life Insurance
Now that you’ve understood what term life insurance is, it’s important to also know how to obtain the right insurance policy.
It may sound intimidating at first, but just know that the process is straightforward and quicker than most people expect.
Here's a step-by-step guide:
1. Pick a reputable company.
The first step is to take it figure out which insurance company is the best fit for you.
You can choose between two types of insurance companies:
Mutual Company
Stock Company
- Mutual Life Insurance Companies are owned by policyholders (you), which means you have partial ownership. So, any profits the company makes may be distributed to you.
- Stock Life Insurance Companies are owned by shareholders, who purchase shares of its stock to earn profits and achieve greater returns on their investments. Unlike mutual companies, the policyholders do not directly participate in the company's profits or losses.
2. Compare Quotes
Insurance companies use basic information, such as your age, gender, and health habits, to provide an estimate of your premium.
However, these estimates can vary between companies, so you must compare costs from different insurance providers to avoid overpaying for coverage and find a policy that meets your specific financial needs.
3. Fill Out Your Application
After reviewing and deciding which insurance company you'd like to work with, fill out your application.
Following your application submission, the decision of approval is in the hands of the insurance company.
If the odds of providing death benefits to beneficiaries are high, they may increase premium rates or simply deny insuring you.
4. Figure Out How Much Coverage You Need
To determine how much coverage you need, question yourself:
Who am I trying to protect?
How much coverage would they need if I were no longer here?
Do I have any debt that needs to be paid off
Will my children need funds for their education?
A common rule of thumb is to aim for coverage that is 10–12 times your annual income, plus any significant debts.
5. Choose a Term Length
The right term length really comes down to your family’s needs.
10 to 15 years: Most suitable for older individuals. If your children are grown or you don’t have children, the term length provides you with enough time to become self-insured.
20 to 30 years: Most suitable for those with young, dependent children. A term of 20 to 30 years would give you plenty of time to keep your children protected until adulthood.
However, do note that the more years you choose, the higher the premium rates tend to be.
6. Name Your Beneficiaries
Now it's time to mention your beneficiaries; these will be the ones who will receive the benefits.
But, do keep your beneficiaries updated; you may unintentionally be harming your loved ones with the very policy you chose to protect their financial future.
7. Get Approved and Start Your Coverage
Once the insurance company reviews your application, you will either receive an approval, a modified offer, or a decline (which is rare).
If approved, your policy will become active for the term you selected, protecting your family.
Common Questions Answered
Is term life insurance really worth it?
Yes, it absolutely is; term life insurance is most people’s top choice due to its affordability and simplicity (particularly young and healthy people).
Those that depend on you can use the payout to help cover funeral expenses, continue paying the mortgage, or continue living the financial lifestyle you built together.
Can I cancel my term life insurance policy at any time?
Yes, you can cancel your policy at any time without penalty. However, it’s essential to understand that once you‘ve canceled your policy, you lose your coverage, and it cannot be reinstated.
I’m single with no kids, do I still need life insurance?
Even if you don’t have kids depending on your income right now, term life insurance can still be valuable enough to cover your debts or even funeral costs.
You can even mention your parents as your beneficiary for the time being; it could provide them with coverage to help them with their needs after retirement.
Can I cash out against my term life insurance policy?
Most term life insurance policies don’t allow taking out money, as it has no cash value. The cash value option is only possible with permanent life insurance policies, such as whole life insurance.
So, your cash does not grow over time, leaving you with nothing to borrow from. Your beneficiaries only receive a payout if something happens to you before your term ends. Once the term expires, the policy is no longer valid, and there’s nothing to borrow against.
Is term life insurance taxable?
No, and that is also one of the biggest benefits of term insurance.
Your beneficiaries receive a tax-free death benefit.
Are employer-provided life insurance benefits enough?
Usually not. Though employer-provided life insurance is a great option and often free, it’s rarely enough coverage for your family.
Most employers provide 1–2 times your annual salary as a death benefit.
And since you should aim to save up to 10 to 12 times your income, it’s best to consider adding term life insurance to your plan.
If you end up changing jobs or get laid off, you could lose your coverage, which is risky, especially as you get older.
Plan Ahead
Protecting your family shouldn’t be complicated, but it should definitely be done.
Keep in mind that life Insurance isn’t for you, it’s for the ones you love.
So, feel free to schedule an appointment to consult with a professional to determine the course of action that makes sense for you, or just complete the form below..
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