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What Is Term Life Insurance, and Is It Right for You?

Published August 29th, 2022 by Island Insurance Agency

For the average person under 70, the odds of dying in any given year is less than 2%. Unfortunately, statistics exist because a tragedy happened to someone. A million to one odds simply mean that one person wasn't as lucky as everyone else.

It's this sobering idea of inevitable and unpredictable misfortune that is the basis for the insurance industry, and for term life insurance in particular. What is term life insurance, though, and how does it differ from other forms of insurance?

We'll answer those questions and talk about whether term life insurance is right for you in this article.

What is Term Life Insurance?

Term life insurance is a form of life insurance that covers a certain number of years, with 10-20 years being the most common. 

This contrasts with whole life insurance, which covers a person until their death. While whole life tends to last longer, it isn't a great fit for everybody. There are several circumstances in which term life might be better. 

Term vs Whole Life Insurance

While having a guaranteed payout on death is a nice advantage, it also tends to be more expensive than a term life policy. Insurance is a business, and like any business, the goal is to make a profit.

To this end, term life insurance costs are often lower, and the payouts can be higher. The major downside to this is that while you can invest more in a term-life policy, you can't withdraw money from it, and the value will never increase.

Whole life policies create an account that may appreciate in value, and your payments will stay the same despite inflation. However, withdrawing from the policy may cause it to decrease in value or even lapse.

Who Should Get Term Life Insurance?

A term life insurance policy can work for almost anyone, but there are a few groups in particular who would benefit more from a term life policy than a whole life policy.

One such group is young adults. The average person enters the workforce in their early-mid twenties, and many states allow dependents to be covered under their parents' insurance until their mid-twenties. Those with teenage children might prefer a term life policy as a way to protect their kids until they reach working age and can provide for themselves.

Term life insurance can also be a great choice for anyone whose life is still somewhat uncertain. This can include anyone who is single at the moment but might not stay that way or any couple for whom the idea of children is still on the table. It can also apply to anyone who might move, switch jobs, or make any major financial decisions in their future.

What is Term Life Insurance: A Guide

What is term life insurance, and who needs it? We've discussed this topic in the paragraphs above, but there's always more to learn and consider. 

If you want to know more about insurance or are in need of it, please visit our site. We are based in Galveston, Texas, so those in the area should definitely take a look. Feel free to contact us if you have any questions or concerns.

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