When the unexpected strikes, families are always thrown into a financial loop. It’s difficult enough to adjust to a sudden job loss, let alone a significant life change like losing a job or a spouse. That’s why so many people opt for term life insurance. It’s a form of personal insurance that provides a financial safety net for your family if you can no longer support them. Since it only lasts for a set period, term life insurance is cheaper than its permanent counterpart or whole life insurance. Depending on your financial needs and the risk profile of your family, term insurance offers a variety of benefits. In hard times, term insurance can be a game-changer for your family.
Two Forms of Term Insurance There are different types of term life insurance and ULIP plans. However, when you break down the two primary forms—term insurance with an option to cash out on your policy and term insurance with a guaranteed payout at retirement—you’ll see differences in how the benefits work. Term insurance with an option to cash out on your policy offers a standard payout and comes with an additional option for a cash-out value if you choose to exercise it. On the other hand, term life insurance with a guaranteed payout at retirement offers guaranteed payments at retirement or after 10, 20, or 30 years (depending on your age). A Financial Safety Net That Provides Protection As a personal insurance product, term life insurance provides a financial safety net and is meant to protect your loved ones financially in the event of the untimely demise of the policyholder. It typically pays out to the beneficiary of the policyholder within a few weeks of the policyholder’s demise, which is different from whole life insurance, which usually takes months to years to payout. It’s Flexible You can choose to opt for a policy with a duration or decide to purchase a policy and then later renew it when necessary. People often buy term life insurance because they don’t know how long their family will need financial protection. For example, if your spouse is unemployed, you might purchase a 5-year term life insurance policy. This way, your family would be protected if you could not work. It’s A Great Way to Pay For Your Child’s Education Term insurance can be a game-changer for your family if you want to pay for your child’s education. If you want to ensure that your child has the funds necessary to complete their degree, you may want to opt for a guaranteed payout at retirement. With this option, you’ll have peace of mind knowing that they will have the necessary funds regardless of when they graduate from college or graduate school. This is one of the best ways that term insurance can help your family in challenging times because it ensures that your child doesn’t have debt hanging over their head. It Can Cover Your Loved One's Healthcare Needs One of the attractive qualities of term insurance is that it can cover your loved one’s healthcare needs in an emergency. If an unforeseen medical condition suddenly arises, you can help ease some of your family’s financial burden by covering these costs with term insurance. Term life insurance is also an excellent option for those still employed and would not take out permanent life insurance since their income is pretty steady. However, they may need to access their money soon after purchasing. When you choose a policy with a standard payout, you can easily access the funds in case you need them without penalty. Bottom Line Term insurance is one of the most important things you can do for your family. It may seem like a small thing to have in the face of all the other challenges your family faces when trying to recover from an unexpected event, but it can be a game-changer when it comes to their financial security. The peace of mind that comes with knowing your family will be taken care of financially for a set period or until retirement is invaluable. That’s why so many people opt for term life insurance when they’re unemployed or struggling financially.
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April 2022
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