Bruce Sackrison

Bruce Sackrison is a Napa Valley Register columnist who will write about property and casualty insurance matters.

Today, I’ll talk about why term life insurance can sometimes be the right answer.

What is term insurance?

Term insurance is life insurance, but not for your entire life. It’s only for a limited “term” of time.

Let’s say you have a term life policy for $300,000. That’s the face amount. The “term” is 20 years.

You pay premiums faithfully every month for all those years. If you die on the last day of the 19th year... the last day of the policy... your beneficiary receives the entire face amount of $300,000.

If you die two days later than that... one day after the policy term was over... your beneficiary receives nothing. Zilch. Nada.

You might say, “Wow, Bruce! Why would anyone want a policy like that?”

Here are five reasons why term life insurance could be an important part of your life insurance solution:

1. It funds big dreams.

Actually, this is the first benefit of all life insurance.

You have dreams. It takes time and planning for those dreams to grow into realities. But death can interrupt those dreams and plans.

If you die, term life insurance can provide an instant large check to fund those big dreams.

It can pay for college, replace an income, or save a home or business.

2. It’s really simple.

Term insurance is a simple solution for a “right-now” large risk.

A young family often has big dreams, but a tight budget. Savings is necessary, yes, but protection is even more important right now. A new business may face the same situation... a large need right now, and a limited budget.

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Enter term life insurance.

There is no lifetime savings component to term insurance. This will pose a problem later, of course, when the cost of term insurance increases due to age. But sometimes there is an immediate need to cover a large risk today. Term insurance can be a simple and straightforward answer to that need.

3. It’s really affordable.

That bring us to the main reason many people choose term life insurance. It’s extremely affordable.

There’s nothing wrong with choosing term insurance for cost reasons. I’d rather see someone carry the correct amount of term life insurance rather than remain uninsured or under-insured.

Term insurance is a short-term solution to an immediate need. It can also be combined with a permanent life insurance plan that will slowly build a lifetime solution.

4. It’s very flexible.

Here is where term insurance can shine. It’s flexible. You can choose Yearly-Renewable Term (YRT), or a Decreasing-Term policy. You can also choose a Level Term policy that keeps your premium level for a longer length of time.

For instance, if you need a large death benefit while the children are young, you could choose a Level Term policy for 20 or 30 years. It’s affordable, and levels out premiums for a longer period of time.

During that term, you could be building a lifetime-legacy using permanent life insurance at the same time. It’s a common and wise strategy.

5. It’s the “most for the least.”

To sum up term life insurance... it’s the most amount of coverage for the least amount of money up front. And that can be an important part of an overall life insurance strategy.

My advice:

Term life insurance is not a permanent solution to a lifetime need. But it can be an important tool to meet specific and temporary needs, both business and personal.

You should meet every couple of years with your personal agent to review your life insurance strategies. If you don’t have a personal agent, feel free to contact me with any questions you may have.

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Bruce Sackrison is an insurance property and casualty broker affiliated with Professional Insurance Associates. He is at 707-931-0186 or bruces@sackifs.com.