What is Life Insurance?
Life insurance provides compensation to the beneficiary in
the event of the insured’s death. If the insured
dies, the life insurance company will provide cash payment
to the beneficiary. For example, if you select your
child as your beneficiary, your child will receive compensation
from the life insurance company in the event of your
death.
What is Term Life Insurance?
Term life insurance protects the beneficiary for a specified
period of time. If the insured dies while the life insurance
policy is still in force, the beneficiary will receive
a death benefit. The most popular coverage periods for
life insurance are 10, 20 and 30 years.
LowRateLife offers level premium term life insurance as a cost effective
way to purchase life insurance. With level premium term
life insurance policy, your premiums, or how much you
pay, remain the same during the coverage period. So
if you purchase a 30-year level term life insurance,
your premiums will remain the same for 30 years.
Benefits of Term Life Insurance
It’s
hard to think about what would happen to your loved
ones if you weren’t around. It’s best to
start planning now before it’s too late. Life
insurance can help your loved ones with their finances
in the event of your death.
Some common uses of life insurance proceeds are:
-
Mortgage – Life insurance can pay off the mortgage
balance or provide a stream of income to pay mortgage.
-
Education – The proceeds of life insurance can be used
for educational costs.
-
Taxes – Life insurance can be used to pre-fund federal
estate and state inheritance taxes.
-
Debt – Life insurance can pay off debt, such as student
loans, personal loans, personal bills and credit card
debt.
-
Funeral – Life insurance can be used to pay for funeral
and burial expenses.
-
Income replacement – Life insurance can provide a stream
of supplemental income to the beneficiary so the beneficiary
can maintain the same standard of living.
Term life insurance can also be used for business uses, such
as when the insured is a key person in the company. Examples
of business uses of life insurance proceeds are to pay
off business debts and to protect a business from the
loss of income because of the death of a key person.
Get Free Term Life Insurance Quotes Here
Return of Premium Term Life Insurance (ROP)
Return of premium term life insurance policy refunds all the
premiums paid at the end of the term (coverage period).
Upon the cancellation or expiration of the return of
premium term life insurance policy, premiums are returned
to the policy owner. If the life insurance policy is
cancelled during the policy term length, a designated
percentage of premiums paid up to that point will be
returned to the policy owner. If the life insurance
policy is held for the entire coverage period, 100%
of the premiums paid will be returned to the policy
owner at the policy expiration. So if you purchase a
30-year return of premium term life insurance and you
pay your premiums for all 30 years, you will receive
100% of your premiums back.
How Much Life Insurance Do I Need?
Most financial advisors recommend that you get 10 to 15 times
of your annual income for life insurance. Expenses that
you may want to consider in calculating your life insurance
needs include:
-
Income replacement for your family
-
Educational funds for your children
-
Mortgage payments
-
Personal loans and debt
-
Funeral expenses
-
Estate administration expenses
Your age can also be a factor in determining your life insurance
needs. The younger you are, the more potential you have
to earn income and the more reliant your family is on
your ability to earn future income. When you get older,
you may have more savings, so you may not need as much
life insurance.
You may also use the table below as a guideline for your
life insurance needs.
|
Age |
Income Multiple |
Sample Income |
Sample Need for Insurance |
|
18 - 30 |
15 X income |
$50,000 |
$750,000 |
|
31 - 40 |
12 X income |
$50,000 |
$600,000 |
|
41 - 50 |
10 X income |
$50,000 |
$500,000 |
|
51 - 65 |
8 X income |
$50,000 |
$400,000 |
|
65+ |
5 X income |
$50,000 |
$250,000 |
How Long Should My Life Insurance Coverage Period Be?
The most popular term lengths or coverage periods for
term life insurance are 10, 20 and 30 years. The coverage
period for your term life insurance should be based
on the needs of your family, or those who depend on
you financially. For example, how long until your children
become financially independent? Can your family maintain
the same standard of living without your income?
How is the Life Insurance Benefit Paid?
The
life insurance policy owner may designate a specific
settlement option to be paid upon his or her death.
If the policy owner does not choose a specific option,
the beneficiary will be given a number of choices. These
usually include:
Lump Sum Payment: The death proceeds of a life insurance
policy are paid to the beneficiary in one lump sum payment.
Fixed Period Payments: The death proceeds of a life insurance
policy are paid to the beneficiary(s) for a fixed period.
Life Income with Installments Certain: The death proceeds
of a life insurance policy are paid to the beneficiary
in installment payments through a certain period. After
the certain period, payments will continue to be made
throughout the beneficiary's lifetime but the payment
may vary from the payments during the certain period.
Interest Payments: The death proceeds of a life insurance
policy remain with the insurance company and the company
pays the beneficiary interest payments.
Fixed Installments: The death proceeds of a life insurance
policy are paid to the beneficiary(s) in fixed installments
until the proceeds and interest on the unpaid balance
of the proceeds are exhausted.
Single Premium Annuity: The proceeds of a life insurance
policy are used to purchase a single premium annuity
from the insurance company.
Get Free Term Life Insurance Quotes Here
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