Help with Assessing the Pros and Cons of Term Life Insurance



Most people consider purchasing life insurance at least once in their lives, and many do it multiple times as their lifestyle, and corresponding expectations change.  The need to update one’s insurance protection is not unlike the need to update other important assets like cars and homes.  If you have loved ones who depend on your income for support, it might be time to consider whether you have enough life insurance and if the type of coverage you have is really working for you.

Most people are familiar with Term life insurance. It’s not surprising as it can be a very cost-effective way to ensure short- and long-term obligations are met should something unforeseen happen.  Rates are tied to mortality expectations for a set period of time, or “term”.  Not surprisingly, the younger the applicant, and the shorter the term (i.e., in effect, the insurer’s liability), the lower the rate and vice versa. 

When young professionals are just starting out and establishing their careers, buying a term life insurance plan with a short term (e.g., annual or maybe every five years) can make a lot of sense.  Premiums are low and the change in rates are negligible at a time when budgets tend to be tight and family commitments are minimal. However, as time passes, those premium increases get more noticeable.  Another consideration is that as premiums rise, so does the likelihood of developing a health condition that could impact insurability, putting the insured in the uncomfortable position of sticking with ever increasing premiums to ensure continued protection.

As a result, the popularity of term life insurance plans with longer terms has risen significantly. Interest usually begins when a professional enters their mid-30s and continues through their 40s and into their early 50s. These are prime income earning years and a time of significant financial commitments – purchasing a home, raising a family, saving for retirement and college.  It can also be a time when a family goes from two incomes to one, making the protection of that one, sole income, all that more important.  

Popular term lengths these days range from 10 to 20 and even 30 years. That means an insured can protect their financial and family commitments, with no increase in premium, through their prime income earning years.  Level Term insurance can provide protection all the way to retirement when it’s likely insurance needs will change yet again. The other benefit of a Level Term plan is an insured need not worry about a change in health impacting their insurability.

There are other types of life insurance plans – Whole and Universal Life - that offer other features (e.g. cash value that can be accessed if needed). However, if the primary goal is a death benefit for protection during key income earning years, a 10- or 20-year level term plan is likely the best economical path for peace of mind.

To help you assess the pros and cons of a Term life plan, download this simple comparison chart. It’s a straight-forward overview that can help you assess what’s right for you and your family.

Jeff Elble has been the Vice President of Sales for the Paul Goebel Group since 1997. If you would like to discuss your life insurance options, please call him at 616-234-5602 or email him at Or, visit the Paul Goebel Group online.

Source: Paul Goebel Group

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