Life insurance is critical for the long-term financial security and stability of a family. Young families cannot afford to lose a spouse and a parent. Financially, each parent is needed to cover costs of bills, mortgages, loans, health insurance, general expenses, and school costs. Not only would the loss of a spouse and a parent be detrimental to the current influx of money to cover bills, but there would be added expenses, such as funeral costs and the costs of organizing and running the estate. In order to protect the long-term interests of a young family, the parents need to get term life insurance. Term life insurance can cover funeral costs and other added expenses, such as medical bills. Life insurance can also ensure that the family can keep up with mortgage payments and bills and provide monetary safety for your family.
Why would an individual choose a 10-year versus 20-year term life insurance policy? A 10-year policy is cheaper than a 20-year policy. For a new family, the additional savings coupled with the security of a life insurance policy is worth the shorter policy period. Furthermore, there are circumstances in which a family would prefer a smaller policy period. For example, if a family has a few children from ages fourteen to eighteen, the parents may want life insurance to guarantee financial security for the high school and college years of their children.
What happens when the policy period is over? Do you lose your life insurance permanently? No, your policy simply converts from a 10- or 20-year policy into an annual renewable policy. This means that you will have the option to renew your policy every year. The disadvantage of a renewable policy is that the expenses go up significantly every year. A 10-year policy and a 20-year policy will allow you to have coverage within that time frame at a predictable and fixed rate.