When Is the Best Time to Buy Term Life Insurance?

Life insurance doesn’t have to last for life. Some policies last for a shorter period, and they can be very useful for individuals whose needs are not lifelong.

Life insurance that lasts for life is called whole life insurance. Whole life policies stay in effect for as long as you pay the premiums.

Term life insurance policies, on the other hand, stay in effect for a limited period (called a term). For example, if you select a 10-year term, the insurance company will pay a death benefit if you die anytime during the next 10 years.

Why choose term life insurance over whole life insurance? The primary reason is cost. Because a specified term is less risky to an insurer than a lifetime, term life insurance is usually cheaper than whole life insurance.

You might consider term life insurance instead of whole life insurance if you are certain your dependents will not rely on you financially for the remainder of your life. Let’s say you have coverage for your children who will graduate from college and get jobs in five years. In that case, a five-year term policy might make sense (perhaps 10 if you want a cushion to allow your children to get a solid footing in the workforce).

One warning: Term life insurance may present reinsurability problems. Say you have a heart attack during the term of your policy. When the term expires, if you want to continue holding life insurance, you’ll have to reapply for a new policy. Your health condition may make that difficult and expensive (although some policies offer a feature called guaranteed reinsurability to address this problem, so always look into that when purchasing term life insurance).

Call or email us, and we can help you determine what the right fit for you is.