Shreveport Life Insurance Basics: What is a Term Policy?


Shreveport Life Insurance Basics: What is a Term Policy?

When it comes to protecting your family’s financial future, life insurance is one of the most important investments you can make. You should know your coverage options.

But with so many different types of coverages and policies out there, it can be hard to decide which one is right for you. If you’re from Shreveport or the Ark-La-Tex area, we want to help!

Let’s take a look at term life insurance as one of the major types of life insurance policies. We’ll explore the benefits and potential drawbacks to make sure this type of policy is right for you.

Term Life Insurance Policy

Term life insurance is a type of life insurance policy that provides coverage for a specified period of time or term. Unlike permanent life insurance policies, such as whole life or universal life insurance, term life insurance offers coverage for a set number of years, typically 10, 20, or 30 years. During the term of the policy, if the insured person passes away, their beneficiaries receive a death benefit, which is a tax-free lump sum payment.

Term life insurance policies are typically less expensive than permanent life insurance policies, making them a popular choice for individuals looking for affordable coverage for a specific period of time. The cost of term life insurance can vary depending on various factors, including the insured person’s age, health status, and coverage amount.

It’s important to note that term life insurance policies do not accumulate cash value over time like permanent life insurance policies do. However, they provide financial security and peace of mind during the term of the policy, ensuring that loved ones are protected in the event of the insured person’s death.

Who Should Consider a Term Policy?

Those who should consider a term policy include young families, homeowners with mortgages, and individuals with dependents or debts. This is because term policies offer a death benefit that can be used to cover financial obligations such as mortgage payments, child education costs, or outstanding debts in the event of the policyholder’s death.

Advantages and Disadvantages to a Term Policy

A term policy is a type of life insurance that provides coverage for a specified period of time. It is important to understand the advantages and disadvantages of a term policy before making a decision.

Flexibility

One of the main advantages of a term policy is its flexibility. You have the freedom to choose the length of coverage that best suits your needs, whether it is 10, 20, or 30 years. This flexibility allows you to align your coverage with your financial responsibilities, such as mortgage payments or college tuition fees.

Lower Initial Cost

Another advantage of a term policy is the lower initial cost compared to permanent life insurance policies. Term policies typically have more affordable premiums, making it an attractive option for those on a tight budget. It provides financial security for your loved ones without breaking the bank.

However, there are also disadvantages to consider.

No Cash Value

One major drawback is that term policies do not build cash value over time, unlike permanent life insurance policies like universal life insurance. This means that you will not be able to accumulate any cash savings or borrow against the policy in the future.

Loss of Coverage

Additionally, if you outlive the term of your policy, you will lose your coverage. This can be a concern if you would like to maintain coverage later in life, especially if your health status has changed or if you develop any medical conditions. Renewing or purchasing a new policy at an older age could result in significantly higher premiums.

In summary, while a term policy offers flexibility and lower initial costs, it lacks the cash value accumulation and coverage continuity provided by permanent life insurance policies. It is important to carefully consider your individual needs and financial situation before choosing a life insurance policy.

Average Cost of a Term Policy

The average cost of a term policy can vary based on several factors, including your age, health status, and the coverage amount you choose. To give you an idea of the average cost, here are some sample monthly premium rates for 20-year term policies:

The premium rates increase as the coverage amount goes up. It’s important to carefully assess your insurance needs and select a coverage amount that provides adequate financial security for your family.

When considering a term policy, it’s a good idea to compare quotes from different insurers to find the best rate for your desired coverage amount. Remember that the specific premium rates may vary based on individual factors such as your age, health history, and lifestyle.

The average cost of a term policy depends on various factors such as age, health status, and coverage amount. By exploring different insurers and obtaining quotes, you can find the most suitable and affordable option to protect your family’s financial future.

Death Benefit for a Term Policy

While a terrible name for a “benefit”, a term life insurance policy provides a death benefit, or, the payout given to beneficiaries upon the death of the policyholder. This benefit is an essential aspect of life insurance as it offers a source of financial support to loved ones in the event of a policyholder’s passing.

The death benefit can prove a crucial tool for beneficiaries, used to cover various expenses. One common use of this benefit is to pay off any outstanding debts, such as loans, credit card balances, or medical bills. Another use includes settling mortgages, ensuring that loved ones can continue to live in their homes without the added financial burden.

Additionally, the death benefit can be used to cover funeral and burial expenses, which can often be costly. Having access to this benefit can relieve loved ones of the burden of these expenses during an already difficult time.

How Watley Insurance Group Helps

At Watley Insurance Group, we understand that life insurance can be confusing and overwhelming. That’s why we are here to help Ark-La-Tex clients around our office in Shreveport obtain the best coverage at the most affordable cost.

Our team of experienced professionals will review your needs and situation to provide comprehensive advice on the type of policy that would best suit you. We take the time to explain all available options clearly and concisely so you can make an informed decision about your life insurance coverage.

As an independent insurance agency, we have access to policies from a variety of carriers. We can find a life insurance company with a policy just right for you.

Knowing life insurance costs money, we also strive to get you the best rates on the market, helping you get coverage without breaking the bank. Our competitive rates are based on factors such as age, health status, lifestyle, and more— allowing you to find an affordable policy that meets your needs.

For more information on term policies and how Watley Insurance Group can help you get the best coverage at a great price, contact us today to talk with a Watley insurance agent.

Our team is here to help!

Wayne F. Watley, Jr.

Agency Principal, proud husband & father, and jazz enthusiast.