When Term Life Insurance Is the Better Choice

You know you need life insurance, but how do you know which one is right for you?

Here are just a few scenarios when term life insurance may be the better choice…

1. You want to pay as little as possible while ensuring that your family may stay in the same home without the expense of mortgage payments.
   • Buy a Decreasing Term Life policy otherwise known as Mortgage Insurance.

     As the amount due on your home decreases so does the benefit amount payable by the policy. (Not to be confused with PMI which is mortgage protection for the mortgage company in case you default on your mortgage. This is usually required if you owe more than 80% of the value of your home.)

     Note: Decreasing Term refers to the decreasing benefit amount not to the payments. Most policies are offered on a level-premium basis.

2. You want to make sure your family is taken care of until your children have finished college.
   • Buy a Level Term Policy or just Term Policy. This is usually offered for periods that are multiples of 10. It offers a level benefit for the term of the policy.
3. You can’t afford whole life and just want enough coverage until you can afford a permanent policy.
   • Get a short-term policy and if possible one that includes the Option to Renew or the Option to Convert or both. These options will increase your premium but they also ensure that you cannot be turned down from continuing your policy in the future even if you are uninsurable.

     This does not however prevent the insurance company from increasing your premiums nor does it limit the premium amount that may be charged, although the company may not charge you any more than they charge everyone else in your age group.

4. You have other means of saving and just want to pay for life insurance only.
   • Purchase a term policy that should be long enough to cover you for your entire life.
5. You want a certain benefit amount and coverage now but cannot afford the premiums of a level-premium policy. However you expect to earn more in the future.
   • Buy a 10-year renewable term policy that may be renewed every 10 years. Your premiums will increase every 10 years according to your age but you will have enjoyed a higher amount of coverage in your early years then you could normally afford.

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