Think you understand term life insurance?
Many people call Ryan Simmerman thinking that they need whole life insurance, but quickly find out that term life insurance fits their needs and budget better.
Simmerman, a licensed insurance agent for TZ Insurance Solutions, said life insurance shoppers are usually looking to cover expenses like mortgages, student loans and living expenses for their families if they pass away.
According to Simmerman, buying term life insurance is usually a more affordable way to help protect your loved ones than whole life insurance.
There are 3 main misconceptions about term life insurance:
Keep reading to get the truth about term life insurance.
Simmerman said the largest misconception is that term life insurance doesn’t cover the same items as whole life insurance. He said people think it comes with loopholes on how your beneficiary can spend the money, but this is simply not true.
In fact, if you have a term life insurance policy, your beneficiaries will not be limited in how they can use the policy’s payout whatsoever.
Both term and whole life insurance policies will pay your beneficiaries, who can use the money any way they see fit — to help pay off a mortgage loan, start an emergency fund, pay for a child’s education, resolve personal debts, or whatever they think is the best use of the money.
“Once they realize that it does cover everything the same, it just covers them for a term or a length of time, then they are able to kind of grasp the benefits of it and that it would work for their situation,” Simmerman said.
Term life insurance tends to be less expensive than whole life insurance if you are in relatively good health. This means you can pay lower premiums or increase your coverage amount with term coverage.
Simmerman said when he talks to clients that are interested in whole life insurance, they usually end up buying a term life insurance policy.
“They don’t realize the cost of the whole life policy or they are looking for a very large amount because they want to cover a mortgage or their family,” he said. “A whole life policy is just not feasible for them to do that usually.”
Simmerman said that term policies are ideal to help protect your family from the burden of a mortgage payment or college tuition. For example, if you know that you have $250,000 remaining on your 15-year mortgage, that is a starting point for how much term life insurance coverage to buy to protect your family.
The lower premiums provided with term policies usually help Simmerman’s clients afford the coverage they want.
“Being affordable is obviously a big factor,” he said.
The third misconception is that term life insurance is difficult to get.
There are several types of term life insurance plans to fit your needs, including “simplified issue” term policies that only require a few medical questions and are issued quickly. There are other standard term policies that require medical questions and a short medical exam, but can offer significantly lower rates.
If you decide to enroll in a term life insurance policy, a licensed insurance agent is available over the phone to help answer your questions and walk you through the application process. The entire application process is usually handled in one phone call. An agent will ask a few medical questions and will set up a short 15-30 minute medical exam.
Simmerman said his clients can be hesitant to answer simple medical questions, but taking the extra time can save them every month on premiums, especially if they are healthy.
“Typically you’re able to get a lower rate if you qualify, or more coverage at a lower price, which is what the clients are trying to do at the end of the day,” he said.
For example, a healthy 30-year-old woman could buy a $100,000 simplified issue policy for about $23 per month.1
In comparison, she could get the same amount of coverage with a standard term policy for only $8.44 per month.2
In this example, a standard term policy is 63% cheaper than the simplified issue policy.
Now that some of the most common term life insurance myths have been debunked, you might be wondering whether term life insurance works for you.
Term life insurance offers many different benefits including large coverage amounts and affordable rates.
Coverage amounts from $100,000 to $1 million are available depending on your needs.
You could get up to $1 million in term life insurance coverage that can be used to pay off a mortgage loan, start an emergency fund, pay for a child’s education or resolve personal debts. As stated before, your beneficiary has the complete freedom to use the money any way they see fit.
Large coverage amounts are affordable for many budgets. A 35-year-old female can get $500,000 in coverage for less than $15 per month.3
Your coverage amount will not decrease, and your premium will not increase, for the term period you choose, as long as you pay your premiums as they become due.
You can get started by comparing your term life insurance options with LifeInsuranceDirect.com.
LifeInsuranceDirect.com is a website owned and operated by TZ Insurance Solutions LLC, a licensed insurance agency which works with some of the nation’s top insurance providers, some of which offer term life insurance policies. Licensed agents can answer your questions and help you find the policy that is right for your unique coverage needs.
You can start by requesting a free quote or calling a licensed insurance agent directly at 1-888-704-0661.