Life insurance is something most people don’t think much about… until they start a family or buy a house, and suddenly realize they’re grown-ups. When you’ve got a spouse or kids, you need to make sure they’ll be financially secure if you’re not around — without diverting too much money from other goals like retirement or college savings.
So finding a cheap life insurance policy that offers the right amount of coverage is a main concern of any first-time buyer, as well as those simply looking for a better rate. For your convenience, I’ve created a life insurance quote tool so you can find the most affordable life insurance in your area.
Term life insurance acts much like your auto insurance, so it’s much easier to understand. Like your car insurance, you pay a premium each month for the period of time you wish to be covered, and if you don’t use the insurance (i.e., you don’t pass away) in that time period, the insurance company keeps the money and does not have to pay a death benefit. This is just like your auto policy — if you don’t get into an accident, there is no payout from the insurance company.
Term insurance is generally cheaper because the coverage is only provided for a specific period of time. In most cases, the insurance company will never pay out because you will outlive the term and the policy will expire. However, term life premiums can and do rise with age, whereas whole life premiums stay steady. Late in life, they can become cost-prohibitive.