What does Term Life Insurance Cover?

Term life insurance provides death benefits to the named beneficiaries of your life insurance policyholder. People typically buy a term life insurance policy to cover living expenses for their families, as well as large expenses like a mortgage loan or college tuition, in the event that the insured person passes away during a specified term of up to 30 years. Sometimes people buy just enough term life insurance to cover end of life expenses including burial and funeral costs.

When you buy a term life insurance policy, you select a term (duration), such as 10, 15, 20 or 30 years, and an amount of life insurance coverage, typically ranging from $25,000 up to as much as $1,000,000 dollars or more.

The expenses you want your term life insurance to cover should help you determine the amount of life insurance you purchase. For example, you might want to factor in your family's anticipated future expenses, including:

1. Estimate your family’s annual living costs including housing, insurance, utilities, etc.

2. Add any anticipated costs your family will face in the future. For example, if you know the family car will need to be replaced within a few years, you could add the cost of a new vehicle.

3. Calculate the amount it would cost to pay off your home mortgage loan.

4.If your children are still in school, add the cost of their college education, in addition to the cost of their annual activities including sports and music lessons, etc.

5. You may even want to include the anticipated costs of your children's weddings among major financial expenditures you can foresee in your family's future.

Once you add up the total expenses you want your term life insurance policy to cover, you can then deduct any assets, such as savings and investments, that would also help to cover those costs to help you arrive at an appropriate amount of life insurance needed to adequately protect your family.

Here is a term life insurance needs calculator to assist you in deterring an accurate amount of term life insurance coverage to buy.

Compare Term Life Insurance Quotes