Term Life Insurance Financial Guidelines

Term life insurance financial guidelines, along with a term life insurance calculator, can help you to find out how much term life insurance you really need. Find out how much life insurance you need, and see if you qualify for life insurance rates as low as $7.03 per month.

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Schimri Yoyo is a financial advisor with active life and health insurance licenses in seven states. Born in Haiti. Reared in Brockton, MA. Matured in Philadelphia. Schimri is a proud graduate of Arcadia University, having earned both a Masters in Special Education and an MFA in Creative Writing from the castle-riddled campus in Glenside, PA. By personality and by profession, Schimri is an educator...

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UPDATED: Oct 20, 2020

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Shopping for term life insurance doesn’t have to be dreadful. When creatine term life insurance financial guidelines you’ll need to ask a few simple questions. How much term life insurance do I need? Should I do 20 or 30 year term life insurance? Should I use a term life insurance calculator?

Everyone shops to get the best term life insurance policy but it isn’t always that easy. Enjoy some quick financial guidelines to help you buy cheap term life insurance. You’ll learn how much life insurance to buy, what types of term life insurance you should purchase, and you can start shopping using our term life insurance financial guidelines now with our FREE quote tool above.

Table of Contents

How Much Term Life Insurance Do I Really Need?

Just like your current health is a big part of life insurance underwriting, so is your financial situation. How much term life insurance can you buy? In many cases, you can buy whatever amount of term life insurance you want, for the right price. how much life insurance do I need? Rule of thumb says to buy a policy that covers your debts.

Purchasing term life insurance isn’t quite that easy. For example, a Dave Ramsey life insurance policy might look a little different than yours, based on different factors that affect life insurance.

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These are some factors life insurance companies consider when financially underwriting your application:

  • Reason for the insurance
  • How the amount of coverage was determined
  • The total amount of life insurance you have with all companies
  • Any pending applications with other companies
  • Any life insurance policies to be replaced
  • The total amount of life insurance you intend to keep
  • Reasons for any unusual owner or beneficiary designations

How is my term life insurance rate determined? Is life insurance included in net worth? Rates reflect coverage, and life insurance companies may require the following financial information to justify the amount of coverage they will allow:

  • Annual earned income
  • Annual unearned income from investments
  • Total net worth
  • Amount of coverage your spouse has
  • Business financial documents (usually for business-related coverage)
  • Documentation for any other unique financial circumstances

Your annual income provides the basis for your insurance need. All companies use a multiple of your income to help determine your insurance need. Reflecting back, how much life insurance do I need? Dave Ramsey is worth more than your Average Joe, so you might like his advice but not his life insurance policy.

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This table represents the average income guidelines. Please note this is not specific to any one company and guidelines do vary. Find out how much term life insurance you qualify for using our FREE quote tool above.

Term Life Coverage Allowed by Age
AgeCoverage Amount Allowed
20-4030x Annual Income
41-5020x Annual Income
51-6015x Annual Income
61-6910x Annual Income
70+Individual Consideration
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Term Life Insurance Policies

How much life insurance do I need at age 55? As you can see above, even if you need more coverage, there are term life insurance policy limits that get more strict as you age. In your 20s and have little equity? You can find term life policies for as low as $7.03 per month for $100,000 of coverage. You can even get low-income life insurance.

If you’ve never researched term life insurance, now could be the time, we recommend help from the NAIC. Term life insurance is a common life insurance type, according to the Insurance Information Institute. So, what are the terms of term life insurance policies? In short, term life insurance policies are paid for a pre-determined term, usually 10, 20, or 30 years. You usually pay a monthly premium to maintain coverage throughout your term.

There are times when term life insurance is better than whole life insurance or other permanent life insurance options. Who is eligible for a term plan? Typically, younger and healthier people will benefit more from term life insurance. Life insurance is often viewed as an investment. Can you cash out a term life policy?

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If you are looking to build cash value, you might want to consider permanent life insurance. Otherwise, a return of premium life insurance rider could be a good term life insurance supplement. How much life insurance do I need? Calculators can’t answer things like return of premium.

You will also want to investigate life insurance company ratings from raters such as A.M. Best. You can see if they are stable by viewing their BBB net worth.

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Life Insurance For a Spouse Without Earned Income

Life insurance companies will consider life insurance for the non-working spouse, as long as the income-earning spouse has coverage. Below are guidelines many life insurance companies use:

  • Will allow up to 100% of the income-earning spouse’s life insurance amount
  • Maximum allowed varies by company, with a range of $500,000 to $1,000,000
  • Companies usually give individual consideration for amounts above $1,000000

If you are married with a stay-at-home spouse, it’s good to be sure you’re both covered.

Term Life Insurance Financial Guidelines: The Bottom Line

There’s a lot to process regarding term life insurance. You want to be sure you purchase enough term life insurance to protect your family. Don’t wait to start shopping with our term life insurance financial guidelines by taking advantage of our FREE quote tool below.

References:

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