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If you have dependents, then you’ll want to leave some money to them upon your death. By purchasing term life insurance, you’re making sure that they’ll receive money if you die in a set period of time.
Term life insurance is one of two major types of life insurance. The other one is whole life. For term life insurance, the costs are lower but you’re only covered for a set period of time.
Term life insurance is often used to provide for dependents or pay off debts. When you buy term life insurance, you choose the term. It’s often between 10 and 30 years. The death benefit as well as the cost is set.
To determine how much you need, work with your insurance agent to determine what your family will need to replace your income. The goal is to cover what your family will need financially without your salary.
Your policy has no value outside of the death benefit, and only pays out if you die within that time period. Most people will set the term to end when their dependents have grown up and left the house, they’ve paid off their mortgage and sufficient savings to pay their bills.
When choosing life insurance, your first choice is between term and whole life. Term life only pays out a death benefit if you die during a specific term.