When to Buy Term-Life Insurance

When to Buy Term-Life Insurance

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Life insurance is a crucial part of financial planning no matter your stage of life.

An up to date, sensible policy can keep your family from financial disaster if you die, but deciding which type is best for your life situation can be tricky. Both whole and term life insurance policies allow you to lock in the same monthly payment over the life of a policy (at your choosing), with a lump sum to be paid to the beneficiary upon death. But whole life insurance policies also come with stock, bond and money market investments, and some tax advantages.

Life insurance policies get more expensive as we age, and those over age 50 should keep close track of when their policies expire, advises Scott Page, CEO of life settlement provider Lifeline.

You should reevaluate your policy every few years to make sure it still fits your lifestyle. For instance, a spousal death or divorce changes the need for protection, and grown children may lessen the need for insurance coverage, according to Page.

Experts say there are often better ways to invest funds than in expensive, whole life insurance policies, and that a term life insurance policy tends to make the most financial sense if:

You seek only a death benefit. When the insured dies, the policy pays the face amount to a beneficiary, says Philip Cioppa, managing principal and chief investment officer of Arbol
Financial Strategies. You can buy term life insurance for periods of one to 30 years, and the sum is guaranteed.            More