A typical life insurance policy can come in a great number of shapes and sizes. If you're choosing a life insurance policy for the first time, it's important initially to decide which type of life insurance policy is ideal for your specific situation. Life insurance policies can generally be broken down into two categories - term and permanent. Life insurance policy.
Term life insurance, which can be a more popular option, provides coverage for a specific length of time which you choose; while permanent life insurance covers you in perpetuity. We find that term life insurance is right for many people, but if you have questions about whether you should purchase term or permanent life insurance, you can always contact one of our licensed agents for assistance on choosing the right type of life insurance policy for you and your family.
What is a Term Life Insurance Policy?
Term life insurance policies are generally between 10 and 30 years in length. These types of life insurance policies provide both a fixed premium (the amount you'll pay) as well as a fixed payout (the amount we'd pay your family). Term life insurance is a popular option because it boasts benefits that are attractive to people of most ages and situations. These benefits include:
Affordability - Not only will you pay the same rate for the entire term, but you can also choose a coverage amount and term length to fit your budget.
Low maintenance - Term life insurance allows you to "set it and forget it". As long as you pay your premiums, your policy continues throughout the designated time period.
Guaranteed Payout -Your death benefit is fixed, meaning that beneficiaries receive the payout that you chose at the beginning of your term. More options - You can choose the term policy with the time limit and coverage amount that is ideal for your current and future needs.
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Once you decide upon term life insurance, you'll need to consider for how long you'll need a policy to be in effect and the coverage amount that you'll need. Answering these questions begins by considering the following:
How long do I need a life insurance policy?
The length of your term policy depends on how long you anticipate financially supporting your loved ones. Ask yourself this...
If you have debt, the length of time it will take you to pay it off can be a helpful indicator in the term length of your policy.
If you know how long you'll be depended on for financial support from a spouse or children, it can help you identify the length of time you'll need a term policy.
The dollar amount of life insurance coverage you need can affect your term length. If you need a high amount of coverage, you may want to consider a shorter term length to fit your budget.
How much life insurance coverage do I need?
Some experts will tell you that the answer is between 7 and 10 times your salary, but it can vary tremendously based on your individual needs. Ask yourself this...
If you have a mortgage, student loans, business loans or any other debts, a good beginning can be to calculate the total amount of your outstanding debts.
You may want your death benefit to assist in childcare or college tuition for your children. Perhaps you want to provide supplemental retirement for your spouse in addition to your funeral expenses. Once you've considered what you'd want your death benefit to help cover financially for your family, try to calculate the total amount of money it would cost to do so.
The answers to these questions may not seem clear immediately, but with a little consideration ahead of time and some guidance from one of our licensed agents, you'll be able to make an informed decision on the type of life insurance policy that is right for you. You can also use our life insurance calculator to find out how much life insurance you need.
© 2018 AIG Direct Insurance Services, Inc. Agency services provided by AIG Direct Insurance Services, Inc. ("AIG Direct"), CA license # 0B57619 and AR license # 0100105378, a subsidiary of American General Life Insurance Company ("AGL"), Houston, TX and an affiliate of The United States Life Insurance Company in the City of New York ("US Life"), New York, NY, all members of American International Group ("AIG"). Each issuing insurance company is responsible for financial obligations of their respective insurance. Guarantees are backed by the claims-paying ability of the issuing insurance company. Products may not be available in all states and product features may vary by state. For all companies mentioned, their financial professionals and other representatives are not authorized to give legal, tax or accounting advice. For advice concerning your individual circumstances, consult a professional attorney, tax advisor or accountant.
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