For the longest time, people have always purchased whole life insurance as compared to term life insurance. However, as people continue understanding how term life insurance works, more and more people are purchasing it.
In this article, we look at the reasons why term life insurance is becoming more popular.
Let’s delve into specifics.
- It is less expensive
Generally, term life insurance has cheaper rates as compared to whole life insurance. The sole reason being, term life insurance is for a limited amount of time.
Insurance firms offering this policy give cheaper rates to attract more customers hoping it will expire before a claim is made.
Additionally, these cheaper rates have attracted more young families into purchasing it. Especially families that live on a limited budget.
Term life insurance is flexible as it offers you more options as compared to whole life insurance. You can choose to pay from one year to as long as you feel you need. What’s even more comforting is, even for the short-term policies, renewal can be done annually.
For those that are looking for a long-term policy, insurance companies offer 10, 20, and 30-year policies. These are the best options for people who are looking for a cover that will cater to their mortgage or their children’s college fees.
Most people are afraid to take insurance policies because they have a rough time understanding the finer details of the policy. This is, however, the opposite when it comes to term life insurance.
Term life insurance policies are very easy to understand. While shopping around for a policy will only be required to have three simple things in mind; the amount you wish to be covered, how long you wish to be covered, and the type of life insurance company you wish to invest in.
- Faster payouts
The proceeds paid after a term life insurance has matured, is not part of a probate estate. This is unless, of course, the estate is the sole beneficiary of the policy.
As such, the proceeds are paid faster to the beneficiary without any interruptions or delays caused by the administration of the estate.
- No taxes
The proceeds paid to the beneficiary after the death of the policyholder are not entitled to any federal income taxes. In most cases and in almost all states, the proceeds are exempted from state inheritance taxes.
- Can be used as collateral
Another reason you should take a term life insurance policy is that you may use it as collateral or security while seeking a personal loan from various financial institutions. As much as lenders will, most often than not, prefer permanent policies because they have better cash values, having a term life policy will show lenders that you will be in a position to repay the loan especially if you have a high credit score.
These are just a few reasons why you should take a term life insurance policy. To enjoy these and much more, call your life insurance company today.