Insurance is purchased for one reason and one reason only, to protect against potential future risk. Traditionally, purchasing insurance is not fun; it’s not easy, and you are not sure if you did the right thing after you bought a policy.
Level-term life insurance is a type of life insurance policy that provides a death benefit for a specified term, usually 10, 15, 20, or 30 years. The death benefit remains the same throughout the policy term, hence the name “level term.” This type of policy is often chosen by individuals who want to ensure that their loved ones will be financially protected after their death.
One of the critical benefits of level-term life insurance is that it provides financial security for a set period. This can be particularly useful for individuals with a mortgage, or other financial obligations they want to ensure will be paid in the event of their death. For example, if a person has a 30-year mortgage, they may choose a level-term life insurance policy with a term of 30 years to ensure that their mortgage will be paid in full in the event of their death.
Another advantage of level term life insurance is that it is usually less expensive than other life insurance policies, such as whole life insurance or universal life insurance. This is because the death benefit is guaranteed for a set term, and the cost of the policy is based on the age and health of the individual at the time the policy is purchased. As a result, level-term life insurance is often a good choice for individuals on a tight budget and looking for a cost-effective way to provide financial security for their loved ones.
A level-term life insurance policy can be purchased as either a renewable or a non-renewable policy. A renewable policy allows the policyholder to renew the policy at the end of the term, while a non-renewable policy will expire at the end. Renewable policies are usually more expensive, but they offer greater flexibility and the option to continue coverage beyond the original time of the policy.
It is essential to remember that level-term life insurance does not build cash value like other life insurance policies. This means that policyholders cannot access the money they have paid into the policy while they are still alive. However, this also means that level-term life insurance policies are typically less expensive than other types of life insurance policies that do build cash value.
To determine the amount of coverage that is needed, individuals should consider their current financial obligations, as well as their future financial goals. For example, if a person has a mortgage and a family, they may need a higher death benefit to ensure that their loved ones will be financially secure in the event of their death.
When choosing a level-term life insurance policy, it is essential to consider the length of the term and the amount of coverage needed. For example, if a person has a 30-year mortgage, they may want to choose a level-term life insurance policy with a term of 30 years to ensure that their mortgage will be paid in full in the event of their death. However, if a person is younger and in good health, they may want to choose a shorter term, such as 10 or 15 years, to take advantage of lower premiums.
When choosing a level-term life insurance policy, it is also essential to consider the individual’s health. Individuals who have a pre-existing medical condition may have difficulty finding affordable coverage, or they may be required to pay higher premiums. In these cases, shopping around for the best coverage and comparing the costs and benefits of different policies may be necessary.
In addition to the term and amount of coverage, it is essential to consider the options and riders available with a level term life insurance policy. For example, some policies may include a living benefit rider, which allows the policyholder to access a portion of their death benefits before they pass away.
I work with my clients to educate them about their options so they can make the best decision for themselves, their families, or their businesses. You may be asking why I don’t push my “goto” carrier (which in the insurance field is usually the one paying the highest commission). First of all, I don’t have a “goto” carrier. I contract with multiple “A-rated” pages and use them equally so that my clients have the best available options for their unique situations.