Learn all the many ways a term life insurance policy can benefit you and your loved ones
Sure, you’ve heard that a key part of adult-ing is getting life insurance. Maybe you’ve heard it offers peace of mind, or financial protection for your loved ones.
But what do those things actually mean? And what other benefits come from getting term life insurance?
We’re glad you asked. Below, learn the key benefits of term life insurance — some you might expect, and some you might not.
In this article:
What is term life insurance?
Before we dive into the benefits, let’s explain what, precisely, we are talking about. Life insurance is, like other types of insurance, a way to get financial protection in case something goes wrong.
With life insurance, your beneficiaries — often a partner or spouse, but potentially anyone else who depends on you to pay for things — receive a death benefit if you die while your policy is in place. The death benefit is equal to the value of your policy, and is typically paid out as a lump sum, tax-free.
There are two main types of life insurance: whole life insurance and term life insurance. Whole life insurance covers you for your whole life (obviously), and as a result, it can often cost quite a bit more per month in premiums. That’s because coverage includes the years when you’re older, and likely to be in poorer health — that is, the years when you’re most at risk of dying.
Term life insurance covers you for a set period of time (the “term”). Most people choose a coverage term for the years when they’re covering someone else’s expenses (like housing and food for your spouse and children) or paying off debt (like a mortgage).
This is because if you were to die, the loss of your income would create financial hardship for your family. After those years are over, however, many people find they no longer need life insurance — if you’re retired and your kids are financially independent, for example, there’s no need to pay higher premiums to replace a salary you no longer earn.
So that’s it in the proverbial nutshell. Now, let’s learn some of the benefits of term life insurance.
What are the benefits of life insurance?
Before we focus on term life insurance, let’s touch on the many benefits of any life insurance policy.
Financial protection for your loved ones
Think about it: Who would pay for things like rent, a mortgage, groceries, tuition, clothes and so much more if you weren’t around? If you have kids, or are the sole breadwinner in a marriage, or even if you are a stay-at-home parent (who provides nearly $200,000 in annual value, according to Salary.com), life insurance is a good idea.
That’s because, in exchange for a monthly premium, your insurer agrees to pay the value of your policy to your designated beneficiaries if you die. The money from this lump sum payment can be used for anything — from end-of-life expenses like burial or a funeral, to long-term costs like food and a place to live.
One other thing about that money: It’s almost always tax-free. This means your beneficiaries get the entire value of your policy.
Peace of mind
You’re not just buying life insurance coverage when you purchase a policy. You’re also buying peace of mind. You’ll no longer have to worry about how your family will cover debts or manage without your income after you die.
One less thing to worry about? Yes, we’d call that a benefit.
What are the benefits of a term life policy?
So now let’s dive into the specific benefits that term life insurance has to offer.
Multiple coverage length options
This is one of the big ones. With term life insurance, you get to pick the ideal coverage term length for your needs — nothing less, nothing more.
If you’re nearing retirement or the end of your mortgage, you can buy a 10-year term that covers the all-important years to go. If you’re a newlywed with a baby on the way, you can buy a 30-year term that covers you until Junior is grown, and potentially through the entirety of a mortgage.
Whole life insurance policies (including permanent life insurance policies) tend to be one size fits all — you’ll be covered until the end of your life no matter how old you are or how long you expect to be responsible for someone else’s expenses. Term life insurance policies are more “many sizes fit many,” though we admit that’s not as catchy.
Not sure how much term coverage you need? A good rule of thumb is five to ten times your annual salary, but you can also start with an online life insurance calculator. And if you find that, at the end of your term, you need a little more coverage, we have good news: 1, You’re still alive, which is worth celebrating; 2, You can typically extend your existing coverage (at a higher premium); 3, You can always apply for more coverage if and when you need it.
The costs of a permanent policy add up quickly. On average, a 30-year-old man will pay $387.67 a month for $500,000 of whole life coverage, according to Quotacy. And that’s the rate for someone who doesn’t have health issues or engage in riskier behaviors, like smoking — in other words, that’s as cheap as a whole life policy is likely to get.
That same man could buy a 20-year, $500,000 term life insurance policy from Haven Life for $19.04 a month. That’s a difference of $88,580 across 20 years for the same amount of coverage.
Why is term life more affordable? It’s because insurers view someone younger as less risky. After all, the odds that you’ll die someday are 100%. The odds that you’ll die in your 30s, 40s and even 50s, are considerably lower, and those are the years when most people have term life insurance policies in place.
One other thing: Most life insurance policies offer level term premiums, meaning they stay the same throughout the life of your policy. If you purchase a term life insurance policy when you’re in your 20s, for example, you’ll pay that same low rate throughout the life of your policy, even if you have it into your 50s.
You might also like
A very simple way to accomplish a very important task
The benefits of Haven Life
So now you’ve learned why you should consider life insurance. And you’ve learned why you should consider term life insurance in particular. But let’s mention some of the benefits of Haven Term, the term life insurance offering from Haven Life.
With Haven Life, the entire application process takes place online, and can be done in minutes. Some applicants might even receive a coverage decision immediately, without having to take a life insurance medical exam. (It’s important that you be truthful in your application, though, or you risk the non-issuance of the policy or non-payment of the death benefit.)
Start with determining how much coverage you need and how long you need it. (Again, that’s where our life insurance calculator comes in.) Then you can get a quote with our signature real rates — that is, a quote that actually matches what you’ll actually pay if you’re approved.
From there, answer a few questions about your medical history, and you’re on your way to that coveted peace of mind. Oh, and if you’re approved, you can manage your account entirely online, too.
MassMutual has our back
Buying a term life insurance policy is a big commitment — some policies last up to 30 years. It’s understandable that you want to make sure your insurer will still be around then, and be able to meet its financial obligations in case the worst should happen to you.
Haven Life is wholly owned by MassMutual, and each policy is issued by MassMutual or its subsidiary, C.M. Life. That means you get the comfort of an insurer that’s among the highest-rated with third-party rating agencies, with the convenience of a digital-first insurance agency. Best of both worlds, we say.
100% no-exam life insurance policies
Maybe you’re skittish around needles, or maybe you have concerns about passing a medical exam. That’s where Haven Simple comes in. It’s a 100% no-medical-exam-required term life insurance offering. (This means you need to be 100% honest on your application — if not, you risk the policy not paying out down the road.)
The tradeoffs are you’ll have a lower coverage cap. (Though it’s capped at $1 million, which is more than enough for many people.) You’re also likely to pay a slightly higher premium, due to the insurer knowing less about you.
But again, if a medical exam is a problem for you, don’t let that stop you from getting the (wait for it…) peace of mind that comes with having a term life insurance policy in place.
Haven Life Plus
Haven Life Plus is a bonus rider offered to eligible Haven Term policyholders. It’s a suite of no- and low-cost services intended to benefit you while you’re still living, from a subscription to a leading fitness app to no-cost trust and will services.
Suffice it to say that if you want to double down on peace of mind, Haven Life Plus is something to factor into your life insurance considerations.
Our editorial policy
Haven Life is a customer-centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.
Our editorial policy
Haven Life is a customer centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.
Our content is created for educational purposes only. Haven Life does not endorse the companies, products, services or strategies discussed here, but we hope they can make your life a little less hard if they are a fit for your situation.
Haven Life is not authorized to give tax, legal or investment advice. This material is not intended to provide, and should not be relied on for tax, legal, or investment advice. Individuals are encouraged to seed advice from their own tax or legal counsel.
Haven Term is a Term Life Insurance Policy (DTC and ICC17DTC in certain states, including NC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Haven Term Simplified is a Simplified Issue Term Life Insurance Policy (ICC19PCM-SI 0819 in certain states, including NC) issued by the C.M. Life Insurance Company, Enfield, CT 06082. Policy and rider form numbers and features may vary by state and may not be available in all states. Our Agency license number in California is OK71922 and in Arkansas 100139527.
MassMutual is rated by A.M. Best Company as A++ (Superior; Top category of 15). The rating is as of Aril 1, 2020 and is subject to change. MassMutual has received different ratings from other rating agencies.
Haven Life Plus (Plus) is the marketing name for the Plus rider, which is included as part of the Haven Term policy and offers access to additional services and benefits at no cost or at a discount. The rider is not available in every state and is subject to change at any time. Neither Haven Life nor MassMutual are responsible for the provision of the benefits and services made accessible under the Plus Rider, which are provided by third party vendors (partners). For more information about Haven Life Plus, please visit: https://havenlife.com/plus
-Easy online application
-Can get coverage immediately after applying online
-Pretty seamless process throughout the experience Cons:
-Although told I was covered initially after applying online, I was informed that I needed to get physical check up in order to continue the plan.
-Although I’m very healthy, my plan price increased 2x after the physical checkup.
Applying for life insurance in your 40’s is exhausting!! But at least Haven made it as easy as possible! Everything is efficiently handled through email. Communication is excellent, they give updates all along the way. Scheduling the bloodwork is easy and convenient. Plus, the rate was better than other companies. Easy to sign off on paperwork.
The application was easy to complete and the rate quoted was very competitive. The amount applied for required an examination and that process was very convenient, efficient, flexible, and the medical professional was friendly and capable. The policy approved was exactly as quoted with an option to add to the amount originally applied for and I took advantage of the offer. Haven Life is a subsidiary of MassMutual, one of the highest rated companies in the insurance industry. I couldn’t be happier!
I shopped around for a few weeks before finding Haven Life. They made the application process very easy, and I was thrilled with the competitive rate they offered.
The folks at Haven Life were so response and helpful during my application period. They were also warm and kind.