How to Choose the Term on Your Term Life Policy

Choosing the term of a term life insurance policy is critical. You want to make sure that you choose a term that is going to provide sufficient protection. Although term life policies are affordable, this is not the time to focus on price alone.

Age

Your age is going to play a role in the term that you want. Most insurance companies offer terms between five and 35 years. A 30-year-old is going to require a different term than an 80-year-old simply because of life expectancy and overall desired coverage.

This is where it's important to look at where you are in your life and what kind of coverage you are looking for. If you’re not honest about this, you may experience a term life policy that expires before you pass, which means that the money that you paid in simply goes away. Your goal is to prevent that from happening through more effective planning.

Financial status

Everyone has a different financial status and this needs to be taken into consideration with terms as well. For example, if you are 40 years old and you plan on retiring at 65, where you will then have pension, 401(k), and other financial support, you may only want a term policy to get you to the age of 65. If you are 40, this would be a 25 year term. If you are 50, you may only need a 15 year term.

Often, with term life insurance, you are simply looking for coverage in the event you suffer an unexpected death. Otherwise, you want to reach a point where you are financially stable so that you can provide the necessary financial protection to your family in another way. Otherwise, you would look at whole life insurance, where you would be covered for the entire day of your life, whenever that maybe.

Cost

Only after you have looked at your age and financial status should you choose a term. For example, you may be considering a 20 year term versus a 30 year term. If either are going to be sufficient for your needs, look at what the cost difference is. Considering you will pay more into a 30 year term, it may provide you with a lower monthly payment and also help to give you more coverage into your Golden Years.

It can be difficult to determine the term that's right for you. Additionally, it can be challenging to determine the value for your policy as well. This is one it's helpful to talk with an independent insurance agent who has knowledge of life insurance policies.

Work with an agent who will take the time to sit down with you, answer questions, and guide you every step of the way. This way, when you purchase a term policy, you know it’s providing the desired level of coverage.