If youre considering buying life insurance, whether for the first time or to supplement policies you already have in place, youve made a good decision. Term life insurance is the most affordable way to protect your familys financial security for the long haul. It replaces your income in the event of your death. And life insurance ensures your dependents can support themselves financially in your absence.
Term life insurance is surprisingly affordable. If youre in your early or mid-career (20s, 30s or 40s) you can buy coverage for under a dollar a day. Even if youre older, you can most likely find a policy thats right for you and your dependents at a price you can afford.
Your biggest questions may be: How much term life insurance do I need and for how many years?
Many tools and tips from experts can help you decide. Making an important decision that may affect your familys future security takes a little number crunching. Try an online calculator to help you get to the bottom line with minimum hassle.
But first, check out these tips from pros on how to decide whats right for you:
The Length of the Term Depends on How Long Your Dependents Need Your Income
If your spouse is your beneficiary, cover yourself until you plan to retire. If your children are your beneficiaries, protect them until they are at least 18, or until you expect them to finish college. To cover a mortgage, choose a policy that will be in place at least for the length of the loan. Depending on your age, you can purchase policies guaranteed for 10, 15, 20 or 30 years.
Take Into Account the Roles of Your Dependents
If your spouse or partner is employed, you both need term life insurance to protect your incomes. If your spouse stays at home and runs the household, consider the cost of replacing the many roles your spouse serves – child care provider, house cleaning and maintenance, meal preparation, etc. A good rule of thumb is to get at least 50 percent of the term life coverage for a stay-at-home spouse as for the primary breadwinner.
You might also consider inexpensive child riders for your dependent children. Usually for a flat fee applied to the parents coverage, each of your current and future children can be covered for up to $25,000.
Consider Term Life Insurance as Part of Your Overall Financial Plan
Rather than looking at life insurance in isolation consider all of your familys financial obligations. Take into account the estimated costs of college for your children, your projected future income growth, your other assets and your future household expenses. Once you get a spreadsheet of your estimated income and expenses, you can consider how life insurance partners with the rest of your financial planning.
Buy More Term Life Insurance Than You Think You Actually Need
Since term life insurance is affordable, now is not the time for a conservative investment. Your income will likely rise over the years, as will your expenses. While you cant accurately project how much either of these will rise, you can have a cushion to ensure your dependents maintain their lifestyle.
Consider More Than One Type of Policy
Instead of one large policy, multiple smaller policies might work best, as you can vary your coverage as your needs change. For example, you can buy a 30-year term policy to cover your income until your retirement and a 20-year policy to cover your children until they graduate from college. If your children are very young, however, a 30-year policy may be better protection. And you wont have to shop for coverage when youre older and rates are higher.
When Youre Ready to Buy Term Life Insurance …
Use SelectQuotes online calculator to help you determine your term life insurance needs. In this secure tool, youll answer questions about your dependents, enter data about your available cash and liquid assets, college and retirement savings, mortgage, any current insurance policies and your financial goals for your family. The calculator gives you an instant read out to help you get started.
In making your decision, always remember what youre really buying: peace of mind. Its impossible to place a dollar figure on the serene feeling youll have in knowing your family will be financially secure no matter what the future may bring.