Life Insurance FAQ

What is term life insurance?
Term life insurance is an insurance policy that will protect your loved ones in the event that you die an untimely death. Term life insurance pays out a death benefit if you die while covered under the insurance. For example, if you have a 30-year term policy that offers $500,000 in coverage and you die within 30 years of the purchase date, the $500,000 death benefit will pay out to your designated beneficiaries. At the end of the 30-year term, you will either have the opportunity to renew the policy, convert it to a whole life policy, or let coverage lapse.

Why should I buy insurance coverage that doesn’t pay unless I die?
The purpose of buying term life insurance coverage is to protect your loved ones who may be depending on you financially. If you were to pass away unexpectedly at a young age, your spouse may be left unable to pay the mortgage and your kids might be left unsupported. Your other dependents, including aging parents, may also find themselves without the financial support they need. A term policy lets you protect your loved ones by insuring that their financial status remains stable even if you pass away.

Term life insurance can also be purchased to protect business partners. For example, if you are a partner in a business, a term life insurance policy can be purchased and can pay out to your partner to buy your half of the business in the event of your death.

When should I buy term life insurance?
The best time to buy term life insurance is when you are young as the policy premiums will be the lowest at this time since there is less risk of death. Even if you do not have people depending on your income now, if you expect to at some point in the future, then you should consider buying today.

Why should I buy term life insurance instead of whole life insurance?
Whole life insurance tends to be much more expensive than term life insurance. This is true not only because of the fact that you pay more to insure yourself for life but also because whole life insurance is a form of investment where you invest excess and earn a return. Most financial experts agree that there are better rates of return elsewhere and that term life insurance is a wiser choice. Not only that, but when you are older and the term of your insurance expires, hopefully you’ll have enough money saved and have your mortgage and debts paid down so there will be no one dependent on you living and earning income.

Are there different types of term life insurance?
There are different types of term life insurance. Two of the major types include level term and yearly renewable term. Level term insurance is often a better choice because your premiums and coverage remain the same for the life of the policy. Yearly renewable term may start out costing less but the premiums can adjust upward each year and your coverage can change annually, meaning the policy is likely to become much more expensive as you age.

How much life insurance do I need to buy?
The amount of life insurance you need is going to vary depending upon your income and debts. An expert Texas insurance agent at Selected Benefits can help you to determine exactly how much term life insurance you need in order to provide comprehensive protection for your family, business partners, and others you wish to protect through the purchase of your insurance policy.