There are many types of life insurance policies available. Premiums, options, guaranteed cash value, length of time, and risk can vary greatly among them. Some policies are tied to the market and therefore fluctuate accordingly. As you can imagine, understanding some of these options can be a bit intimidating. Term life insurance is probably the most popular type, and for good reason. Below are reasons why term life insurance is often the best choice.
1 – It’s Straight Forward
Term life insurance is pretty simple to understand. You pay an annual premium for a specific cash value. The policy lasts for a set number of years. As long as you continue to pay each year, it will remain valid. If you pass away during the policy term, your heirs will receive the cash value. If you remain living after the time frame, the policy simply ends.
Here’s an example:
30 year term
$500 annual premium
You would pay $500 per year for 30 years. If you die within those 30 years, your beneficiary receives $500,000.
2 – It’s Most Affordable
Of all the life insurance options, term life insurance is the most affordable. This is partly because it’s valid for only a certain number of years and market performance has no bearing on its value. Additionally, the annual premium is set up front. This makes it easy for most people to budget.
3 – It Starts with Full Cash Value
Some life insurance policies build value over time. The starting value may be quite low with the full value not being reached until many years later. With term life insurance, the full cash value kicks in right away. There is no build-up over time. It is straight forward, so you can purchase the desired coverage amount and know that your heirs will receive that amount during the policy term.
Summary of Why Term Life Insurance Is Often the Best Choice
These 3 factors make it clear why term life insurance is often the best choice. It’s easy to understand, affordable, and offers full cash value without a waiting period. This is not to say that the other types of policies are not beneficial. They certainly are. However, most policies, such as whole life or index universal life, require a larger investment and include a level of uncertainty for cash value. You must take into account market indexes, forecasts, and other complex financial factors. Term life insurance is easy to understand and easy to purchase. It’s a basic and minimal policy that everyone should consider! Click here to obtain a free term life insurance quote.