Term life insurance is an affordable way to guard against unexpected expenses or hardships for your loved ones should something happen to you. Having this type of policy means two things:
- It will only offer benefits should the person covered by the policy die.
- Those benefits will only be paid if the death occurs within the term of the policy.
Term life insurance is structured like a contract. In exchange for making monthly payments on the policy, benefits will be offered to the beneficiaries of an individual who happens to die within the term period.
If a death occurs outside of the contracted period, then there is no obligation for the policy to pay any benefits at all.
Why Choose Term Life Insurance Since It Expires?
Term life insurance is intended to provide a specific need should the unexpected happen to a family. Parents might choose to have a term life insurance policy, for example, to cover advanced educational expenses for their children should something happen to them.
Spouses might use term life insurance to cover the cost of a mortgage for each other should something happen to one of them as well.
That is because the costs of whole life insurance, which does not have the same term limits, are too much for many families. Term life might have an expiration date, but it still provides a layer of protection for loved ones should something unexpected happen.
When Should I Choose Term Life Insurance?
Term life insurance is a good option to consider if your protection needs will last for 10 years or less. For individuals younger than 45, it tends to be a better insurance option than a cash value insurance plan if the protection needs are short-term. That is because high amounts of coverage can be obtained for people in this demographic for a relatively small premium in many circumstances.
There are various types of term life insurance from which to choose as well. Some policies may increase over time, others decrease over time, and some remain at a locked benefit. This allows every individual or family to meet their specific needs.
Term life insurance provides protection against the unexpected but offers benefits that will expire. That is what it means to own term life insurance.
What is the Cost of Term Life Insurance?
The cost of term life insurance depends on how you personally answer two questions.
- How much coverage do you need?
- What is your current health profile?
There are several factors that are included in an individual’s health profile when their term life insurance costs are being calculated. Women typically live longer than men, so they pay lower monthly premiums. People who are younger pay lower premiums than those who are older.
Currently lifestyle choices that could affect health may also change the costs which are quoted. People who smoke will typically pay a higher premium. Certain occupations that are classified as being dangerous, such as commercial fishing, may also increase premiums.
Having a No Exam term life insurance policy may increase premiums compared to policies that use health information obtained by your doctor or medical provider.
Every term life insurance provider will quote individualized rates. The following information is based on industry averages only and is for a $500,000 term life policy with a term of 20 years.
For women between the ages of 20-34: Nonsmokers will pay an average of $26 per month and smokers will pay an average of $74 per month.
For men between the ages of 20-34: Nonsmokers will pay an average of $33 per month and smokers will pay an average of $107 per month.
For men and women between the ages of 35-49: Nonsmokers will pay an average of $36 per month. Women who smoke will pay an average of $144 per month, while men who smoke will pay an average of $217 per month.
Once individuals reach the age of 50, whole life insurance monthly premiums are usually more affordable than term life monthly premiums. For women who reach this age, the minimum average payment is $87 per month and the maximum is $1,500 per month. For men, the minimum is $112 per month and the maximum is $2,017 per month.
These average rates will drop with a lower benefit payout and a shorter contract term. A policy for $250,000 over 10 years could cut the average payments listed above by up to 50%.
These rates are just provided as examples and are subject to change based on your circumstances and the insurance company that you choose.