It’s tough to put a price tag on peace of mind. But essentially that’s what a term life insurance policy can be: an aid in the knowledge that your dependents and loved ones can be taken care of financially in the event of your untimely death.
Exactly how much term life insurance coverage you need is largely dependent upon your current lifestyle as well as where you see yourself down the road in relation to future commitments. Buying term life insurance provides temporary financial relief from the burden of costly expenses that can include your mortgage, debt and the care of a child or elderly parent.
When considering a target range related to personal coverage, one common rule of thumb is to take your current income and then multiply it by 17. For example, if you currently make $50,000 per year, your term life insurance coverage could be around $850,000.
Designed to meet your unique needs
In general, you should consider buying term life insurance if:
* You have dependents (including children, spouse or others living with you who rely on you financially)
* You currently have a mortgage or similar large debt
* Your estate is large or complex
* You own your own business or are partnered with someone
These criteria apply to most people. However, there are some who may not need the protection of term life insurance coverage. If you currently have no dependents and do not expect any in the future or if you are already retired and living off personal savings, investment income or other sources of personal wealth, a term life insurance policy may not suit your current situation.
However, there is an exception. Buying term life insurance coverage can assist in estate planning and be useful to avoiding probate or taxes in some cases. That’s because, by and large, all beneficiaries of your term life insurance policy are exempt from paying income tax on any payouts they receive through your policy. If you own more than one home or your estate is large or complex, you may benefit from asking your attorney about the benefits of buying term life insurance and how it can help you and your family plan ahead.
One of the primary benefits of a term life insurance policy is that it’s designed to meet your needs at any stage – available in convenient different term lengths such as 10, 15, 20 and 30-year periods, each featuring a single low-cost monthly premium.
So whether you’re just starting a family or looking to provide for the one you already have, buying term life insurance has the potential to deliver the ultimate financial protection no matter where you are in life!
