FAQ: Who Benefits from Term Life Insurance?

Posted in Life Insurance , Term Insurance

September 7th, 2009

If you are the sole income generator of the family, your spouse and children can benefit from you purchasing term life insurance.

Benefits of Term Life Insurance

Term life insurance is a type of insurance policy that only guarantees a death benefit to your heirs if you die during the time the policy is active. As you age the premiums will go up, but initially the premiums are affordable and the policy rules and payouts are simple to understand. If you are on a limited income, your family will benefit most from term life insurance.

Who Buys Term Insurance?

Generally people opt into securing a term life insurance policy if they have young children and other family members solely dependent on them. As your children get older, they will be able to provide for themselves thus making term life insurance a short-term strategy for providing benefits to your love ones.Term life insurance policies are typically purchased from 1 year to 30 years. Those policies that are between 1-5 years are generally renewable.

Unlike other types of insurance, generally known as permanent or whole life life insurance, the only people who will benefit from a term life insurance policy are those who are going to inherit the money. With permanent life insurance, the policyholder can also benefit as that type of policy builds cash value and can also be used as an investment strategy.The only time your beneficiaries will benefit from a term life insurance policy is if you die while you have the coverage.

During the child raising years it is important to have some level of financial security in place so your beneficiaries will not experience the worst case scenario your passing can cause. A term life insurance policy will benefit your loved ones by providing them with some financial protection so they can mourn your loss properly and have time to work out a master financial plan for the future.