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A “Quick Start” Guide to Term Life Insurance

Growing family

“I can’t afford life insurance!” Sound familiar? If you’ve found yourself thinking this about term life insurance, you’re not alone. It’s no wonder: In a 2015 Insurance Barometer Study, 80 percent of respondents overestimated the annual cost of a term life insurance policy by more than double, according to the study’s sponsors, LIMRA, a worldwide research organization based in Windsor, Conn., and Life Happens, a nonprofit based in Arlington, Va.

Term life insurance is actually more affordable than you might think. A Gerber Life Term Life Plan, for example, can start as low as $8.40 a month for a $25,000 policy1.

So how does term life insurance work? Read on to find out and to learn about its many benefits. 

First Things First: What’s a “Term”?

Term life insurance provides the flexibility for you to choose exactly how long you’d like or need coverage (i.e. your “term”).

Maybe you want coverage only until your child graduates from college. Or, perhaps you’re paying off a debt and want coverage only until your loans are paid off. Whatever your reason for seeking term life insurance, use this guide to help you determine how long you may need coverage.

Calculating Your Coverage Needs

Your coverage amount is the dollar payout that your beneficiary (or beneficiaries) would receive in the event of your passing. To determine your coverage needs, take the amount that your dependents would need to be financially secure if you were to pass away now, then subtract what your dependents would receive in that same circumstance. Once you’ve done the math, find a policy that aligns with those needs.

Determining Your Premium Rate

People pay for their term life insurance policies through a fixed, locked-in monthly payment called a “premium” or “premium rate.” The premium is tailored to you, based on such factors as your age, gender, health, tobacco usage, and the state where you live.

Generally, the lower your coverage amount, the lower your premium will be. For term life policies specifically, the duration of your coverage is also a factor. For example, a 10-year term life policy will cost less than a 30-year term life policy, if the coverage amounts are the same.

Premium rates often are lowest when you’re young and healthy, so the sooner you buy, the more money you could save.

Getting Started

Does term life insurance sound like a fit for your family? Let us customize a term life insurance quote just for you. 

1 Premium based on a 10-year Term Life policy for a healthy female aged 18 to 32.

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