According to Lifehappens.org and LIMRA, approximately one-third of Americans say they would feel a financial impact within just one month if they lost the income of their household’s primary wage earner.
While most people realize life insurance can help protect their families from not being able to make ends meet, 63 percent say they haven’t bought it because they believe it will be too expensive.
What they don’t realize is life insurance probably costs less then they imagine. Two out of three adults think it costs twice as much as its true cost.
Term Life Insurance: An Affordable Way To Get Peace of Mind
Term life policies are well worth your consideration if you’re looking for life insurance you can afford. They offer lower premiums than whole and universal life policies, and they’re flexible in the amount of coverage you can get and the amount of time that coverage is in effect. Term life policies stay in effect for a set number of years (a “term”). Most often, people sign on for policies that last 10, 15, 20, 25, or 30 years, but you can apply for shorter periods of coverage. The shorter the term, the lower the premium you’ll pay.
You also typically have flexibility in how you pay your term life insurance premiums. Most companies offer the choice of paying monthly, quarterly, or annually. Paying annually is generally most economical because insurance companies give a small price break when they’re getting their money upfront for the year.
What If You Sign Up For Term Life, But Then Can’t Make Your Payments On Time?
Despite term life’s affordability compared to other forms of life insurance and your good intentions to pay your premiums, there’s always the chance you could run into hard times (injury or illness for example) and find yourself unable to work and keep up with the payments.
Unfortunately, if you don’t pay your premium, your term coverage will lapse and you’ll lose all that you’ve put into the policy.
Not a good situation to find yourself in!
If that worries you, there’s an add-on option that can protect you if you become disabled and not capable of staying on top of your premium.
Most term Life companies offer a Waiver of Premium (WOP) rider that will cover the cost of your premium if you have a total disability before you reach a certain age (typically 60 or 65). With the waiver, you don’t have to pay your premium for as long as you’re disabled. (Note that the WOP rider typically has a waiting period of six months after you first sign up for your policy.)
WOP riders aren’t free. They might add 25% (give or take some percentage points) to your total annual premium.
“A 45-year-old male with a Preferred rating who has a 10-year term life policy with a $500,000 benefit might pay about $440.00 annually for his policy,” explains QuickQuote Financial owner Tim Bain. “When adding the WOP rider to that policy, he would pay approximately $555 annually—a $115 difference. The amount that a WOP rider will add to your policy’s premium will vary depending on a number of factors including age, health status, lifestyle, length of the term policy, and others.”
The Price Of Peace Of Mind
Ultimately, you need to do your research and get answers to your questions before deciding on what life insurance product will best meet the needs of you and your loved ones. Affordability is just one of many considerations to give your thought and attention, but it’s a major one. To get a jump start on figuring out how much term life coverage you might need and how much it might cost, you can use the Life Happens insurance needs calculator and then conveniently get a preliminary quote online.
Source: 2014 Barometer Study, Life Happens and LIMRA