Buying Insurance

Lesson 4: Personal Life Insurance

When To Choose Term Life Insurance

So, you ask, are there any advantages to term life insurance as a personal purchase? The answer is yes. First, if you need some life insurance for a fixed period of time, say 20 years to make sure your home would be paid for if you died prematurely, then term insurance would be a good option. (Buyer beware:so called "mortgage insurance" is almost always cheaper if purchased through an insurance agent than if purchased through your lending insitution and added as a part of your mortgage. Moreover, decreasing term mortgage insurance pays the bank not your beneficiaries.) If you are a young person with a growing family, your life insurance needs are enormous. The least expensive way to purchase large amounts of life insurance for relatively short periods of time, say 15 years or less, is by biuying term life insurance. For a means to estimate your life insurance needs, see Hungelmann, pp.289-291. Term life insurance is a good stopgap measure, but as you will see below is not a substitute for some permanent life insurance. Consider your circumstances carefully. Purchase term life insurance for specific needs for a known period of time. Accept the fact that if you live to normal life expectancy, or even near it, your term life insurance will be gone.(See Hungelmann, pp.305-6.)

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