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Many life insurance agents will convince policy holders to purchase only long-term life insurance coverage. However, there are circumstances in which a shorter term life insurance policy may be preferable.
Here are some reasons why you may want to consider buying a 5 or 10-year term life insurance policy: Lower Cost Most people purchase a short-term life insurance policy because of the lower cost. If you buy a policy with a longer term, your premiums will be more expensive. You will pay much less to buy a 5 or 10-year term life insurance policy than one with a longer term or whole life coverage. Insurance companies can afford to charge less because a short-term policy poses less of a risk to them. Although your general health can affect the cost of your premiums, you will generally pay less for purchasing a policy with a shorter term. Despite this advantage, you shouldn’t buy a short-term life insurance policy strictly because it costs less. Once your policy expires, you will most likely have to pay a much higher rate to purchase a new policy. Therefore, you can pay less to buy one 30-year term life insurance policy than buying three separate 10-year term life policies consecutively. Ideal for Specific Lifestyle Situations Purchasing a 5 or 10-year term life insurance policy also makes sense when you want temporary coverage for a situation that you expect to change. • Empty Nesters For example, you may wish to purchase a policy that will cover you while your youngest child is finishing high school. Once he/she graduates and leaves home, you will face much lower expenses. Therefore, you can purchase a 5-year policy that covers this time period so you don’t end up paying for coverage you don’t need. • Seniors Seniors can also take advantage of a short-term life insurance policy. If you are approaching the age where you will qualify for Medicare or you will be cashing out some of your financial investments, you should consider a 5 or 10-year term life insurance policy. • Mortgage Owners Perhaps you have almost paid off the entire mortgage for your home. If you have no other large expenses or they are covered with a different type of insurance policy, you may be wiser to purchase short-term coverage. Before you automatically decide to purchase a whole life insurance policy, you should consider your financial and personal situation. You will pay less for term-life insurance, but you need to decide what type of coverage you require. Anyone who is facing a major lifestyle change such as seniors, mortgage owners and empty nesters may find that a 5 or 10-year term life insurance policy meets their needs better than a longer-term policy. |
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