Purchasing life insurance doesn’t have to be complicated. Understanding the basic components of a policy can help you find the right one to meet your needs.
The length of time your policy will remain in effect is known as the term. While you can designate other lengths of time, most life insurance policies will have terms of 10, 20, or 30 years. Keep in mind that the length of your term may affect premium amounts.
Death Benefit Amounts
Another key feature you will have to decide on is the amount you want the policy to pay upon your death. This is known as the death benefit. When determining this figure, be sure to include factors such as:
- Current and anticipated debts
- Income you will need to replace
- Future large expenses, such as your children’s college or wedding costs
The death benefit may be your primary reason for purchasing a term life insurance policy, but it isn’t the only benefit you should think about. You may want to add a rider to your policy. These can serve to pay premiums if you become disabled or pay an added benefit if your death is caused by an accident.
Knowing term length plus the amount and type of benefits you need can help you choose a low cost term life insurance policy that fits your lifestyle and budget.