How Long Do I Need to Keep My Term Life Insurance Policy? Ensure that you are purchasing your plan for the most suitable amount of time for you and your family.
A term life insurance policy is necessary for anyone with a family or someone with dependents who rely on them. Your policy will offer your beneficiaries a payout to help them with any financial burdens that could arise after you were to pass away unexpectedly. Although this is a devastating and sad thing to think about, you never know what will happen, and you should always be prepared. When you purchase a term life insurance policy, you have the opportunity to choose the length of the term. It can be confusing to understand precisely how long you should have a policy, so take a look at a few of these indicators to help you through the process.
Understand How Long You Need to Keep Your Life Insurance Coverage
Consider Your Dependents
Your dependents are one of the main reasons you purchase a term life insurance policy, so you need to ensure they will be covered for the correct length of time. If you are the family’s breadwinner, you will want to provide for your children even after you are gone. If you are the family’s caretaker, you will want a life insurance policy to give your loved ones the financial stability to hire extra help — nannies, babysitters, etc. If you are currently a young family with growing children, a 20 to 30-year life insurance policy will probably fit you and your family best. Having a lengthy policy will allow you to know your children are covered until they are financially independent.
Calculate Your Debts
A term life insurance policy can also be beneficial because it can pay off your debts if you die instead of passing them onto a loved one or cosigner. In most cases, debts can include any type of business loan, student loan, credit card debt, or even a mortgage. If you don’t want to leave your debts to anyone after you pass away, purchase a term policy that lasts for the extent of your longest debt. This will not only give you peace of mind, but it will also assure your loved ones that they will not have to scramble to pay off your debts or make the mortgage payment.
Think About Your Age
As we mentioned before, if you are a young family, you’ll probably want or need a longer life insurance policy. When you are younger, you have an increased chance to receive lower premiums compared to purchasing a plan later in life. Your premium is determined by several factors that include your age and your health, making it more beneficial to buy a policy as early as you can. With that said, the longer the policy length, the more expensive the premium will be for you to pay.
The increased premium is because the longer the policy length adds more risk the insurance company will have to come up with the money for your payout. When you are purchasing a policy young, your health and age will still allow your premium to be lower and makes it worthwhile to buy now instead of wait. A longer term gives your family a safety cushion in case anything goes wrong. Even though you are a young family, you still unfortunately never know when something could happen.
Know the Steps to Take After Your Policy Expires
After you have purchased your policy and it is expired while you are still living, what’s next? There are multiple routes to take when your life insurance coverage is coming to an end. Take a look at the three most common options you will have to move forward.
- Extend your current policy: Most term life insurance companies allow you to continually renew your current plan without going through another underwriting process. This means that even if you’ve had the policy for 50 years, you won’t have another medical exam — which is a plus for those who have developed health issues. Although there is no underwriting, the company will still change your premium every year that you renew the policy.
- Convert into a whole life policy: Many term life insurance policies contain a conversion option, allowing you to switch to a whole life insurance policy without another medical exam. Various insurance companies handle this process differently, so it’s essential to speak with your company and start the process well before the term’s expiration date.
- Find a new policy: If your current policy does not fit your life’s needs anymore, you always have the choice to search for a brand new plan.
While researching your most suitable term life insurance policy, it’s crucial to consider the length of time you need the policy for you and your family. With Fabric, you can discover various quotes from multiple insurance carriers in as little as ten minutes. Through Fabric, you can apply for life insurance, create your will, and organize your family’s finances. Learn more about Fabric and receive your life insurance quotes to keep your family safe.