Term life insurance is a life insurance policy that pays out a pre determined amount of money to the policy holder upon his death. While most people think of term life insurance as only having one use, there are many benefits it can be used for. Term Life Insurance Usage #1 Short term risk coverage. If you know that you will be traveling overseas, or might face increased risk due to temporary factor, you can buy term life insurance coverage for that period. Term Life Insurance Usage #2 Business dissolution. If your business would need to be dissolved upon your death you could use the death benefit to cover associated costs. Instead of your family paying for the business dissolution out of their pockets, they could use the proceeds from the term policy to cover the costs. Term Life Insurance Usage #3 Funeral expenses. While no one wants to think about this, funeral expenses can be as high as $15,000. You can buy a term life insurance policy if a small pay out to cover the funeral expenses. Term Life Insurance Usage #4 Mortgage coverage. If you are no longer around how will your family pay the mortgage? Many term buyers buy term life policies for the duration of their mortgages and for an amount that will allow them to pay off their mortgages. Term Life Insurance Usage #5 School tuition. If your children will still be in school for another five years you can purchase a term life insurance policy for those five years. Calculate how much tuition will cost over the next five years and purchase a term policy for that amount. Term Life Insurance Usage #6 Income replacement. If your spouse will need your share of the income for the next ten years you can use term life insurance to replace that income. You would calculate how much income you would make in a ten year period and buy a term life policy for that amount. You would only buy a 10 year term life policy because your spouse only needs your income for the next ten years. An important note is that you would calculate your after tax earnings, since that is the actual amount of money that you would earn. |
