Choosing among term life insurance and other types of life insurance needs careful consideration.  Assess why you need a life insurance policy. Consumers these days can be easily confused with the number of life insurance forms available to purchase. Should you buy a term policy, whole life policy, and universal life policy?

Term life insurance is the same, but clearly different from other life insurance types such as whole life or universal life insurance. Term insurance does not have a savings element like the previous two life insurance types. Term insurance is sometimes called “pure” insurance because the policy only has death protection.

Level term insurance means you have the same amount of life insurance coverage you originally purchased. Decreasing family life insuranceterm insurance means as time goes by your amount of insurance decreases. Families usually shop for the lowest rate, but do not realize they are not receiving full value for their money.  For example, both policies will start out with the same face amount or death benefit of $250,000. After 5 years, the level term insurance policy still has a death benefit of $250,000 with the same premium. Term life insurance policies have fixed term or years, hence the name “term” insurance. The most common term insurance would be a 20-year or 30-year term policy. In basic terms, the life insurance benefit and premium would be locked in for a 20 or 30-year term. You know exactly what you will be paying for the whole life of the policy and if your family end up having to claim during the time period,you know exactly what they will get.

The decreasing term policy went from $250,000 to about $210,000. The monthly premium stayed the same just like the level term policy, but the coverage amount decreased. The “decreasing” part is important when you compare both life insurance policies. Initially the decreasing term policy appears to be a great deal because it has lower monthly premium. Then you realize the monthly payment remains the same, but the life insurance coverage is decreasing. The Theory of Decreasing Responsibility states that in the early years of your marriage, you have a lot of responsibility. You’re purchasing a home, have credit card debt and raising kids. During this period, you are at your peak point of responsibility. You also are at your peak of level term insurance needs. Most people can buy a 20-year to 30-year level term policy to protect both spouses income at an affordable rate. Once all the children are grown and the home mortgage is paid off, you could lower the amount of insurance. One of the big lies a lot of insurance companies and agents will tell a family is they need the full amount of life insurance their whole life

Just like other kinds of insurance, term life insurance has exclusions.  All insurance polices have exclusions, your vehicle insurance policy most likely has age exclusion and an exclusion against taking your vehicle into any foreign country without notifying the insurance company. Term life policies are no different .

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