Life insurance is an essential investment for any individual because it provides a financial safety net to the beneficiary in case of the policyholder’s untimely demise. If you’re a parent, it’s a perfectly sensible decision to get a life insurance policy to ensure your children are not left out in the cold in the event of your passing.
What Is Term Life Insurance?
Term life insurance is a type of insurance that offers a guaranteed death benefit for your beneficiary should you pass away within a specified term. If you want protection but you’re presently strapped for cash, then this type of insurance would be a feasible option for you as it’s more affordable. The premium or the amount that you need to pay monthly or annually is significantly lower compared to what you would pay for a traditional life insurance plan but the coverage is comparable.
How Long Should The Term Be?
Term life insurance is usually available in increments of five years such as 10, 15, 20, 25, and 30 years. There is no ideal length, but the right length would depend on your financial situation, for instance, the length of your mortgage payment. Since insurance can serve as income replacement, you can be assured that your child will have funds to pay for expenses.
Here’s how a 10-year term life insurance policy can help provide financial security for your child:
- It Can Help Cover Your Child’s Education
Maybe you’ve always dreamed of your child attending a prestigious university. But what if you die before you see that dream fulfilled? Do you think your child will be able to put himself through college?
If you buy a 10 year term life insurance, your child will receive a death benefit should you pass away during the specified term of 10 years. This term plan is particularly suitable if you have a young child, say, 11 years old. Even if you die early, your child will have the means to pay for his college tuition and living expenses.
- It Can Help Pay For Your Child’s Wedding
A wedding is another significant milestone in the life of your child. It’s pure joy to see your grown-up child walk down the aisle. But you’re well aware that weddings could cost a small fortune. And you don’t want your child to be saddled with expenses when he gets married in about ten years if you’re no longer there for him. In this case, getting a 10-year term life insurance would be a practical choice for you.
Even though you might not be there for the wedding, you’ll still be able to help with the expenses, making your child’s dream wedding a reality.
- It Can Help Cover Mortgage Payments
The monthly mortgage payment typically comprises a significant portion of a household’s income. Sadly, if anything happens to you before the mortgage is fully paid, the liability will be transferred to your loved ones. This will inevitably drain your family’s financial resources, and eventually affect your child’s well-being.
Getting term life insurance for 10 years is an ideal solution to prevent this scenario, especially if your mortgage is about 10 years away from full payment. The insurance policy will protect your loved ones from being burdened with debt as they will have the resources to pay for outstanding mortgage payments.
- It Can Help Pay For Loans
As with a mortgage loan, other outstanding loans could get passed on to your loved ones in case you die. This could leave your family in financial ruin because they could no longer count on your income.
But if you’re insured, your loved ones will have the needed funds to pay off your loan, letting them keep a roof over their heads. What’s more, the insurance payout that your beneficiary will receive is generally tax-free.
- It Can Help Ensure Business Continuity
If you’re running a business, a ten-year insurance policy can help you manage scalability and expenses. For instance, to buy more equipment or move into a larger place, you need to take out a business loan. Unknown to many, having a life insurance policy can help you qualify for a loan.
Whatever happens, your business will continue to flourish. Your loved ones will take over the business when you’re gone, giving them a steady source of income. And when the time comes, the family business will be your child’s inheritance.
The right insurance for you is the one that best suits your needs. If you cannot afford to pay expensive premiums, then settle for a 10-year term life insurance as it provides financial protection without breaking the bank. Generally, the premium for a 10-year term costs less than that for longer terms.
Aside from being affordable, term life insurance also flexible. You can opt to renew when the policy ends. Some term policies may be converted to permanent life insurance. You can also add ‘riders’ or additional benefits.
After determining the right length or term, you need to decide the amount of coverage. This refers to the amount of your life insurance and it should match your financial obligation such as mortgage payments, loans, or your child’s college tuition. This way, your insurance functions as income replacement. With this, you can have peace of mind, knowing that your child’s future is secure.