Term Life Insurance: High Payout?

Posted in Life Insurance , Term Insurance

September 24th, 2009

Term life insurance is one of the most simple and straight forward types of insurance you can buy. You can purchase a term life insurance policy anywhere from 1-30 years in length, and if during that time you die, your beneficiaries will receive a death benefit. Upon your demise, the heirs to your estate will receive the payout amount of the term life insurance policy in one lump sum, the result of your premium payments into the policy.

Term Life Basics

In general, term life insurance is uncomplicated and easy to afford. Although the amount of the death benefit may be sizable, whether or not it is considered high is determined by both the amount of money you are willing to pay into premiums as well as how much the insurance company is willing to cover you for. Term life insurance for those who are young and healthy is much cheaper than those who are older and not in peak physical condition.

Payouts and Benefits

According to MetLife, most people only have life insurance that is 2.5 times their annual salary. If you are following that rule of thumb, then depending on your annual income, your term life insurance policy may have a high payout. However, insurance professionals highly recommend that policyholders opt for 10 years worth of their annual income to determine their ultimate term life insurance payout amount. However, due to policy changes earlier in the decade, you can opt to have even 20 or 30 years of your annual salary in a payout if you’re willing to pay extremely high premiums for it.

When investigating term life insurance, it is important that you have a true grasp on the financial situation you are in. With a substantial amount of money in the bank, you may choose to get a term life insurance policy with a moderate payout, perhaps to cover the mortgage and college education for your children.