Is term life insurance worth it?

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To quickly answer the question above, ask yourself the following: Do you want to financially protect your loved ones and help minimize the financial impact for them if you die unexpectedly? If the answer is “yes,” then term life insurance is a solid, affordable way of achieving that goal. Here’s a breakdown of why term life insurance is worth getting (and when it’s not worth getting), and how that may apply to you.

Why is life insurance necessary?

If you’re in your 20s, 30s or older, and have a family who is financially dependent on you, then buying life insurance is probably a smart idea. The payout from a life insurance policy can provide a financial safety net that can help your loved ones pay for expenses, such as a mortgage, child care and many other day-to-day bills that come with adulthood.

You have to approach buying life insurance like you would any aspect of your life that poses a risk and ask yourself, “What’s the worst case scenario?”

It’s probably fair to say that, without a financial cushion from life insurance, your family might face a difficult money situation. That’s why term life insurance can be so valuable. It’s an affordable way to financially protect the people you love most.

So, what exactly can life insurance help with? The death benefit from a life insurance policy could help:

  • Replace lost income and pay living expenses, like rent or a mortgage
  • Pay debts you leave behind
  • Provide for your kids’ care if you are a stay-at-home parent
  • Pay for burial, estate taxes and other final expenses
  • Fund college costs
  • Pay unpaid medical bills or taxes
  • Create an inheritance

Even if you’re living the single life with no spouse or kids, term life insurance may still be necessary to help protect someone who cosigned a loan with you, such as your parents other others. If the unexpected were to happen, the proceeds of a life insurance policy could help cosigners pay loans that you leave behind, such as cosigned mortgage, student or credit card debt, or even a car loan. Life insurance is also a good idea if you’re taking time off work to go to grad school and want financial protection in place to help pay student loan debt if you were no longer around.

Who needs term life insurance?

Whenever a question includes “Is it worth it?” the answer relates to what “it” costs, and what “it” gets you. So let’s consider the latter. As a term life insurance policyholder, what you’re getting is a cost-effective way to create a financial safety net for your chosen beneficiaries in case you die unexpectedly, through the policy’s death benefit, which is typically tax-free. So in order to decide if term life insurance is worth it for you, consider who the beneficiaries of your policy would be. Do you have a spouse, children or other family members who depend, at least to some extent, on your income? Perhaps the money you earn helps pay for their housing, education or other needs, and they’d find things challenging without it. If you’re single, do you have people in your life who would be responsible for your debts if you died unexpectedly, such as a family member who cosigned a loan?

If the above sounds like you, then a term life insurance policy would be worth it. Probably. Because, having decided that you need insurance, the second factor in determining whether it’s worth it is price.

What does it cost?

As useful as term life insurance is, it wouldn’t be worth getting if the price was so high that it would impede the life you’re living now. So what does it cost? Almost certainly less than you think and, in fact, life insurance is more affordable now than it has ever been. For example, a 35-year old man in excellent health might pay as little as $24 per month for a 20-year, $500,000 Haven Life Term policy, issued by MassMutual. Considering that monthly payment could protect your family financially and give you peace of mind right now, it would seem that term life insurance is worth it. Which brings us to …

What are the alternatives?

Crossing your fingers? Wearing a crash helmet, even when it’s socially awkward? Well, no. If you have dependents, you need life insurance, because stuff happens, and you need to be prepared for it, especially if that stuff (and by “stuff” we mean your unexpected death) would impact the people you care about the most. One alternative to term life insurance is permanent life insurance, the most common of which is whole life insurance.

As the name suggests, permanent insurance covers you for the rest of your life, unlike term, which covers you for a particular number of years (you can choose a coverage term that allows enough time to pay off the mortgage, perhaps, or until your kids are through college). With whole life insurance, you pay for lifetime coverage, and your whole life insurance policy also includes a cash accumulation feature. With term life insurance, you select the coverage duration that is closest to the number of years you anticipate needing the coverage, and if you die during the coverage term, the death benefit is paid to your beneficiaries. The other big difference between the two types of life insurance is price. Whole life insurance is significantly more expensive than term – often five times more costly for the same dollar amount of coverage – however, term life insurance is a simpler product and offers no cash accumulation feature. Whole life insurance is a more complicated product, so if you think it might be right for you, it’s worth speaking to an insurance agent. If you want term life insurance, on the other hand, you can apply for it yourself online in a matter of minutes.

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Term versus permanent life insurance: Which is right for you?

When it comes to shopping for life insurance, the decision on whether to get a term or permanent policy really comes down to your personal preferences and situation.

Term life insurance might be the right choice if you:

  • Are looking for an affordable way to financially protect your family
  • Are seeking coverage to help your partner pay the day-to-day bills if you were no longer around
  • Need coverage until your children are financially independent
  • Need a policy to help pay specific cosigned debts (i.e., a mortgage or student loans)
  • Have, or plan to have, substantial money saved for retirement

Permanent life insurance might be the right choice if you:

  • Seek coverage that lasts a lifetime and won’t expire before you pass away
  • Are seeking a product that offers a cash value component
  • Understand that permanent life insurance involves significantly higher monthly premiums than term life insurance
  • Want life insurance to be part of your long term-financial strategies

How term life insurance works

Term life insurance is one of the simpler (in a good way) and more affordable types of life insurance. It insures your life for a period of time that you choose from the coverage lengths available in your policy. You can choose a term length to last until your mortgage is paid in full or your kids are adults, to avoid leaving behind financial obligations that could burden your family if you were to die unexpectedly during the coverage term.

Most insurers offer term lengths of 10, 15, 20, 25, and 30 years. Depending upon your policy’s provisions, you make monthly or yearly payments for the duration of the policy term. If you were to die during that time, the policy would pay out a death benefit to your beneficiaries.

If you are young and have many working years ahead of you or you recently bought a house, then a long-term policy (30 years) might make more sense.

“When my husband and I bought a Haven Term policy, we both opted for 30-year term lengths,” said Brittney Burgett, Haven Life’s communications director. “We knew we were going to buy a house soon and that we have many, many years until retirement. A 30-year term enabled us to lock in a low price for the several years and life milestones that we have to look forward to.”

If you have young kids and have paid on your mortgage for several years, then a 20-year term life insurance policy might be a better fit.

Determining which term length you need is actually very easy. You can use an online life insurance calculator to receive a recommendation on a coverage amount and term length that may best fit your financial situation.

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When is term life insurance not worth it?

Term life insurance is a great product, but so is a well-made life jacket, and not everyone needs one of those. If you have no dependents, and no one who will suffer adverse financial effects if you die unexpectedly, then you may not need term life insurance. If your children are grown and financially independent, your mortgage is paid off and your spouse would have enough to live on if you weren’t around, life insurance may not be necessary for you. If you’re single, childless and debt-free, then it might not be worth it either (though if you may be adding a spouse or child to your life soon, it could be worth getting life insurance now to lock in a lower rate based on your current age and health.)

For many people, though, term life insurance is worth it – if you have dependents and you want to protect them financially without taking too much of a hit to your wallet, it can be a good choice. To find out how good, calculate your estimated rate with Haven’s online life insurance calculator.

Thinking about life insurance? Why it’s smart to act now

“Buying life insurance” can sometimes feel like one of those to-dos on par with “renovating the kitchen” or “buying a new car.” It’s something you know needs to be done eventually, but the time and expense involved may make you feel like there’s never a “right” time to do it.

Fortunately, it’s easier than ever to buy a term life insurance policy thanks to modern technology (and we’ve already established that coverage can be affordable.) Buying life insurance no longer requires you to find a fax machine, scan documents, or print out pages of information.. Now, you can apply online for term life insurance and find out instantly if you’re approved. If so, you can start your coverage that day.

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“The easiest, simplest process for receiving term life insurance. And the premiums were the lowest quote.” —Michael

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Six steps to buying life insurance online

Step 1: Fill out a life insurance calculator.

Not sure how much life insurance you need? The best way to get a general idea is to toy around with a life insurance calculator. By entering details like your age, income, overall health, and family status, you can find out how much term life insurance coverage is suggested for your family. Check out our free term life insurance calculator.

Step 2: Get a term life insurance quote for coverage.

The beauty of now being able to buy life insurance online is that there are numerous free tools available. When shopping for life insurance, always cost compare by using quote tools. Price comparing will help you choose the right amount of coverage, length of coverage and rate for you, along with other riders or features the policy may offer.

Step 3: Check the rating of the life insurance company.

A rating company such as A.M. Best does the homework on an insurer’s claims-paying ability and assigns a rating that can serve as an indicator of the issuing company’s financial strength. The Haven Term policy is issued by MassMutual, which is rated A++ by A.M. Best.*

Step 4: Get the coverage you need.

Once you’ve decided how much coverage you need, how you want to purchase it and from which issuing company, it’s time to get covered. With Haven Life, you can apply online for coverage — from your phone or laptop and from wherever is convenient for you. In some cases, you can even get an immediate decision on coverage eligibility. There’s no need to wait 4-6 weeks while your application is reviewed.

Step 5: Take a life insurance medical exam.

In many cases, a medical exam will be needed to finalize coverage on a medically underwritten term life insurance policy. Often, you can still have temporary life insurance coverage while you wait for the medical exam results and a decision on your application. With Haven Life’s InstantTerm process, some applicants may qualify to skip the medical exam. That’s because, in partnership with MassMutual, Haven Life has built technology that can analyze application information in real time. If the insurer has a good enough understanding of your health and risk, the formality of an exam may not be needed. However, it’s very important to be honest when completing the application – issuing the policy or paying its benefits depends on the applicant’s insurability, based on their answers to the health questions in the application, and their truthfulness.

Step 6: Assess your policy every few years or after a life event.

Even though your term and coverage are locked as soon as you purchase a policy and continue paying premiums, it’s smart to continually assess your life insurance needs. Life can change rapidly — you could have another child or get married. If that’s the case, you may to change your designated beneficiaries.

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The answer to that question is easy (which is exactly how Haven Life makes applying for term life insurance)

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Peace of mind: So worth it

Those nagging to-dos can drag you down. Getting “buy term life insurance” crossed off your list is worth it for peace of mind. And unlike, say, renovating your kitchen, purchasing term life insurance is an affordable way to provide a financial safety net for your loved ones for the coverage term you select, whether it be a decade, or number of decades, if you were to die during that time. Term life insurance can be an affordable option for you and your family, with a straightforward application process that allows you to stay locked into rates for the length of your term.

So is term life insurance worth it? While there’s no monetary value on peace of mind, for many, knowing you’ve put financial protection in place for your family is everything. And you may find that you can provide this protection for little more than the cost of your monthly music or TV streaming service. Term life insurance may not have a big monthly impact on your budget, which is a good thing, but it can have a big impact on feeling settled and confident that you have protected your family.

Michael Davis is a freelance writer and editor who has covered everything from fashion and music to parenting, work, and finance. He has been a chef, restaurateur and record label owner. Opinions are his own. Sponsored by Haven Life Insurance Agency.

Financial strength ratings are as of May 29, 2019: A.M. Best Company: A++ (Superior; top category of 15); Fitch Ratings: AA+ (Very Strong; second category of 21); Moody’s Investors Service: Aa3 (High Quality; fourth category of 21); Standard & Poor’s: AA+ (Very Strong, second category of 21). Ratings are for MassMutual (Springfield, MA 01111) and its subsidiaries, C.M. Life Insurance Co. and MML Bay State Life Insurance Co. (Enfield, CT 06082). Ratings are subject to change. Ratings do not apply to Haven Life Insurance Agency.

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Real Rate is based on your application and third party data obtained during underwriting.

Haven Term is a Term Life Insurance Policy (DTC 042017 [OK1] and ICC17DTC in certain states, including NC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. Policy and rider form numbers and features may vary by state and may not be available in all states. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Our Agency license number in California is OK71922 and in Arkansas, 100139527.

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