Life changes like buying a home, having a child, or changing jobs often prompt us to reassess our financial priorities. During these times, understanding term life insurance can be crucial—a straightforward and cost-effective way to provide financial security for your loved ones.

What is Term Life Insurance?

Term life insurance is one of the simplest and most affordable forms of life insurance. It involves choosing a policy term—typically 10, 20, or 30 years—and a coverage amount. Should the policyholder pass away during this term, the beneficiaries receive a tax-free payout.

Common Use Cases for Payouts

The death benefit from a term life policy can be used in various ways, including covering mortgage payments, funeral expenses, daily living costs, or even college tuition for dependents.

Types of Term Policies

Several options exist for term policies. Level Term provides constant premiums and death benefits. Yearly Renewable Term offers coverage that renews annually but with increasing premiums as the insured ages. Decreasing Term is often aligned with a mortgage, with a decreasing death benefit over time while maintaining stable premiums.

Additional Features to Consider

Consider options like the Return-of-Premium Rider, where premiums are returned if you outlive the policy, albeit at higher costs. Another feature is Convertible Term, which allows transitioning to permanent coverage without a medical exam.

Why Consider Term Life Insurance Now?

Approximately 102 million U.S. adults lack adequate life insurance, and with rates trending upward, especially for older individuals, now is a strategic time to act. Moreover, 72% of Americans overestimate the cost of term life insurance, making it more accessible than many assume.

Reassessing Your Current Coverage

Your life insurance needs shouldn't remain static as your life changes. If you've taken on new debt, added caregiving responsibilities, lost employer coverage, or simply want to secure lower premiums while you're younger, consider supplementing your existing coverage.

Adapting to a Changing Landscape

In 2025, underwriting is being transformed by AI and big data, offering faster, more personalized decisions. Accelerated underwriting and wellness incentives are becoming the norm, with many insurers considering healthy habits for premium discounts.

Determining Coverage and Term Lengths

Calculate your needs using methods like multiplying your income by 10-12 to cover future needs or using the DIME formula (Debt, Income, Mortgage, Education). For term lengths, align the duration with financial milestones, with popular options ranging from 10 to 30 years, depending on your circumstances.

Ultimately, securing term life insurance is a proactive step towards ensuring peace of mind, adapting as life evolves, and maintaining financial security for your loved ones. Reach out to a licensed insurance advisor to tailor a policy that fits your unique needs.