DEFINITION:
Term life insurance provides coverage for a specific period (or “term”) and pays a death benefit only if the insured passes away during that period.
When & Why It’s Used:
Term life insurance is used when you need life insurance protection for a limited time, such as while raising a family, paying off a mortgage, or covering other temporary financial obligations. Because it does not include a savings or investment component, term life is generally more affordable than whole life insurance, making it a popular choice for those looking for cost-effective coverage.
IMPORTANCE IN COMMUNICATION:
Clear communication about term life insurance with your advisor ensures you understand the scope and limits of the coverage. It is important to discuss the term length, renewal options, and any conversion features so you can plan for the future. This conversation helps align your insurance coverage with your current and anticipated financial responsibilities.
Additionally, discussing term life insurance allows you to weigh the benefits of affordable coverage against the need for permanent protection. By understanding the differences between term and whole life insurance, you can ask informed questions and make decisions that best match your long-term financial planning. This dialogue builds confidence in choosing the right product for your specific circumstances.
EXAMPLES IN CONVERSATION:
“What term length would be most appropriate for my current financial obligations?”
“Can you explain the conversion options available with term life insurance if I decide to change my coverage later?”