Term Life Insurance: BANG for Your Buck!

As a financial advisor, I often get asked about what my preference is pertaining to various types of life insurance, whether term life insurance, whole life insurance, or universal life insurance, which may be variable (investment-based) or equity-indexed (follows a market indices).  My answer is and always be, “It depends on your specific situation.”

Think of term life insurance as a product that can “bridge-the-gap”

However, for the sake of this article, I’m going to talk about the product that gives you the largest bang for your buck, which is without question, term life insurance.

life-insurance

Term life insurance not only provides a mind-blowing rate of return in the form of a death benefit if you happen to pass prematurely and a claim is paid to your heirs, but it is also extremely affordable in early years.

Think of term life insurance as a product that can “bridge-the-gap” between financial uncertainty and being financially stable. What I mean by that is that you may have a need for insurance (i.e., a young family to protect from potential financial ruin, debts that are your obligation but are yet to be paid off), but have not achieved certain financial goals that you anticipate conquering in the future.

While you are on your way to being successful in your respective career, it is probably comforting knowing that there is an instrument such as term life insurance that can provide monetarily for your family if you don’t end up living as long as you and your loved ones expected.  Though they certainly can’t replace you or the love you once provided, they can replace the income you would’ve generated in your working career.

So, as term life insurance may sound all fine and dandy thus far, I often get asked if there are any potential downfalls to the product and how they may pertain to long-term protection strategies

Let’s review that here:

 

  1. Though it is wildly inexpensive for the original duration of the term period (typically between 1-30 years), it will increase in cost dramatically over time and in turn possibly leave you without insurance during the time when having a death benefit in place is of utmost importance: upon your death.
  2. Term life insurance is temporary in nature. Though it is extremely beneficial to have in place if one is to pass prematurely, it is not manufactured to still be in force as a person approaches life expectancy, which allows cost to remain low in relation to other forms of life insurance.
  3. If you want to be certain that protection is in place during potentially vulnerable times in your life, such as getting through college, having a young family, experiencing job loss or change, or when your financial stability isn’t up-to-par, then term life insurance is the greatest thing since sliced bread and you should take full advantage of all that it affords! However, if your goal is to leave a legacy, wealth transfer, or to complete an estate plan that requires a contractually guaranteed death benefit, then nope – not so much!

So, what’s right for you and your specific circumstance?  Well, prior to knowing about you and your situation, I honestly have no clue.  To make that determination in proper fashion, it’s important to assess all aspects of your financial life with a licensed professional.  Then and only then, will you know if this unparalleled bang for your buck is right for you!

1Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation.
2All  life insurance policy guarantees are subject to the timely payment of all required premiums and the claims paying ability of the issuing insurance company.

Written by Jason Frederico CreativeNurse Team member in Las Vegas

2016-31903  Exp. 10/17