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My life insurance agent recommended a term life policy. Is there anything else I should know?

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Term life insurance is less expensive than a whole life insurance policy, but it does not have the same advantages as a permanent policy has, either. Depending on your insurance needs, a term life policy may be the solution you are looking for, but only in situations where the need has a well-defined time limit. If you are not certain about the length of time you need the protection, for instance, a term life policy could look like a good deal but end up letting you down after the term expires.

As an example, if your life insurance policy is being purchased primarily to pay off your mortgage if you die, a term life insurance policy is usually a better solution than a permanent or whole life policy. The whole life policy would serve the same purpose, but you would still be paying the premiums for many years after the house was paid off, where a term policy could be set up to expire on or immediately before the final mortgage payment. Term policies are an excellent way to make certain that your children can attend if you should perish, or to make it possible for the family to move back to where most your relatives live, among many other goals your family may have.

Another consideration is cost. If you are trying to get the most coverage for the lowest cost, term life is a good investment. Similarly, if you have a relatively low income or personal financial value now but expect that to increase in a few years, a term life policy will fill the gap until you need or are able to afford a permanent life insurance policy.

Another factor which you should be aware of is that it is common for a person to have a mixture of life insurance policies. Term policies can be bought each time you need to increase coverage for a limited amount of time, and will supplement your permanent insurance. A good example of this would be if you already have a permanent policy in place, but make a large purchase, such as an RV, that you want to be able to pay off for the benefit of your surviving family if you pass away.

answered Jul 16, 2012 by anonymous
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