There are several types of term insurance plans offered by life insurance companies nationwide…you must select which one is the best for you! You can get an agent to do an “insurance review” to determine the amount of insurance you’ll need OR you can just keep reading further and you can find out how to determine the amount of insurance that you might need yourself.
Most insurance companies have term insurance in 3 different plan categories – 10yr, 20yr, and 30yr term life insurance plans. These plans are very popular mainly because of their inexpensive cost in comparison to whole life insurance plans. The difference between the two is that term insurance is like renting an apartment and whole life insurance is like owning a home. This is because term life insurance eventually “expires” after a certain amount of time (10, 20, or 30yrs)…and whole life doesn’t expire until you die (or until 100yrs…whichever is sooner). Although term insurance might last for 30yrs – you would be able to renew your insurance towards the end of the 30yr period at a higher price.
For instance, a young man who is 30yrs old can buy a 30yr term life insurance plan for about $17/month with a benefit of $475K if he were to die before he turned 60. By the time he’s 60, he should have his home paid for, kids out of the house, and less expenses overall than he currently has. Perhaps a financial advisor would be able to walk him through whether he should purchase another life insurance plan to cover his estate/death taxes when he dies, or if some other tax haven would better benefit him besides another life insurance policy. On the contrary, a whole life insurance plan would cost this same gentleman approximately $170/month with a benefit of $150K. The difference is that his monthly premium would be the same and he wouldn’t have to worry about getting another policy at age 60. This person would also have the benefit of receiving possible dividends and being able to borrow against his benefit amount for other expenses.
When an insurance agent assesses how much insurance you need – we take a brief overview of your financial picture by looking at the size of your assets versus the size of your debts. Then we take your income out of the picture and determine how long your family would survive without you (or rather your income) in the picture. We show this diagram and ask you specific questions – Could they survive 5yrs without your income? 10yrs? 20yrs? As you look at the diagram you realize that your family probably won’t be able to survive that long without you. This is how we agents “sell the need”. By showing you how quickly your family would be lost without your income – you quickly realize how much you need a good insurance policy to cover you if something unfortunate were to happen.
Next we ask specific questions: How would you feel now to know that your family would be able to live life comfortably with your loss of income? To have a paid-for mortgage? How would you like for your kids to not worry about affording college if something were to happen to you?
“Here is the plan that will be the best fit for you…this XYZ insurance plan is within your budget and will give you that “peace of mind” to …….”
This is how we agents talk and how we get you to buy a non-demand product that you probably would put off to buy at a later date – but in fact, you really need to buy today. This is how we get you to see or “feel” that need. And hopefully...you'll buy what you need.