Low Cost Term Life Insurance Explained

Many people like you who are properly planning ahead start to research low cost term life insurance on the internet.  Maybe you’ve just gotten married, just started a family, or simply realized that life insurance is essential to safeguard your family in case something were ever to happy to you.  Whatever the reason, you should be applauded, as the vast majority of people will never own life insurance.  There are many types of life insurance (term life, whole life and variable annuity being three of the most common), but by far the best option for nearly every person is term life insurance.    
Term life insurance is an insurance policy in its most classic of terms.  In its simplest definition, term life insurance works like this: You pay the insurance company an amount of money each year for the length of the term and this keeps the policy in effect.  If you die during that term then the insurance company pays your beneficiaries the face value of the insurance policy.  If you do not die during that period of time, then the policy ends and that’s the end of your contract with the insurance company.

To give a more detailed explanation of discount term life insurance, here’s how it works: you determine the length of time you want your term insurance policy to last for -- generally 10, 20 or 30 years.  You then determine how much you want the death benefit to be -- most people do this in $100,000 increments, so you’ll often see a $500,000 term life insurance policy or maybe a $700,000 policy, etc.  
To decide on the policy amount you’ll generally want to figure out how much money your family would need in the event of your death.  This will all depend on your life circumstances (how many kids you have, what age they are, if your spouse works, etc.), but a general rule of thumb could be to get an amount that would pay off the mortgage on your house, put your kids through college and provide some additional money for your spouse to have in the bank.  That would be a solid solution for someone whose spouse still works and has kids in school, because he/she would not have to worry about a mortgage payment or college and the money they earn would just go towards living expenses.  This can change of course if your spouse doesn’t work, or maybe your kids are already through college.  It’s best to talk to your insurance agent about your situation. 

Once you’ve decided on the term of the insurance and the face value, you will enter into this insurance contract with the insurance company.  It is best to get offers from multiple insurance companies to compare the costs and the reputation of the insurance company.  The insurance company will give you a physical and they will have their actuaries determine the amount of the annual payment (or “premium”).  For comparative purposes, I’ve seen a healthy 30 year old man get a $600,000 policy for about $600 per year in premiums and a healthy 30 year old woman get the same $600,000 policy for about $500 per year.  
So for just $500 or $600 a year you are giving your family the best type of insurance in case something terrible were to happen to you.  Term life insurance really will help you sleep better at night, as you know your family is safe.  It’s important to look into low cost term life insurance as soon as possible because the younger you are the less expensive the policy will be each year.