With so many options available, is it always in your best interest to get the cheapest term life insurance coverage? And what does “up to 70% off your term life insurance” really mean?
Cost effective term life insurance is simply basic life insurance that pays out a lump sum after your death. The premiums for these polices are generally low because the policies are like your house insurance; there is no cash value.
There are two basic types of term life insurance – decreasing term life insurance and level term life insurance, but decreasing term life insurance is gradually being phased out.
What is Term Life Insurance?
Level term life insurance policies are not as cheap as decreasing term life insurance but do a better job of protecting you. Both of these life insurance policies have many similarities. The reason for the different price structures are that level term life insurance policies, owned by you, can pay off your mortgage and still leave a pay out for your family.
A cheap decreasing term life insurance policy pays only the bank a lump sum to clear your mortgage; it doesn’t leave any money to pay those you leave behind.
Term Life Insurance – Mortgage Priorities
If paying off your mortgage is your priority, then you should look to level term-life insurance. You might have a 20 year mortgage but a 10 year level term life policy.
As you will need to renew the term-life insurance policy at the 10th anniversary, you might want to consider making it a 20 year term life insurance policy.
Term life policies are an excellent instrument to cover a certain amount of time. Insurance companies usually offer 1, 5, 10, 20 and 25 years