Term Life Insurance Crash Course

Why do I need term life insurance?
We view term life insurance as the most affordable way to protect your loved ones from the financial loss of your death. If anyone relies on you for financial support, life insurance is a must. If you were not around anymore, who would provide for your family? While no amount of insurance can ever replace us, it can ensure that we leave a legacy of financial security for our loved ones. Simply put, life insurance is not for us, it is for the people that we leave behind.

How does term life insurance work?
Term life insurance insures your life for a specific period of time that you choose before purchasing a policy, usually 10, 15, 20, or 30 years. During that time period your monthly payment remains the same. Even if your health gets worse, your monthly payment will not increase during the term period of the policy. If you die while you are covered, the insurance company will pay the death benefits to your beneficiary.

How much term life insurance do I need?
The answer varies widely depending upon the circumstance. We view term life insurance primarily as an income replacement tool. You would need to decide how many years of financial support your loved ones would need (for example, until your youngest child graduates high school) if you were to die and multiply that by your income to get a foundational amount of coverage. In addition to income, some people like to cover debts, such as their mortgage, and their children’s college education as well. Again, it is what you feel is best for your family.

Do I need term life insurance if I am a stay-at-home spouse?
Yes. We propose that you have coverage up to 50% of the working spouse’s income, depending upon various factors. The value that a stay-at-home spouse provides their family is extremely important, but not always thought of in terms of dollars and cents. However, a stay-at-home spouse provides tremendous financial value. If you had to put your children in daycare, how much would that cost a year? Who would take care of the household work if you were unable to do it? Would your surviving spouse need to hire help? These are all things to consider when deciding if a stay-at-home spouse needs coverage. There is no right or wrong answer. It is what you feel is best for you and your family.