How to Buy Term Life Insurance in 2024 - NerdWallet (2024)

FAQs

What does Suze Orman say about term life insurance? ›

Suze Orman recommends that generally most people should get a 20 year term life insurance policy at 20 times your annual income. What does that mean? That means if you're 30 years old and you make $50,000 a year you should get a million dollar 20 year term life insurance policy.

While it's difficult to face that potential reality, it's easy to get a term life insurance policy that provides peace of mind. In some cases, you may even be able to buy term life insurance online without a medical exam. We'll cover everything you need to know to get the right policy for your needs.

Term Life insurance Cons: If you outlive the term length, your coverage will end and you won't receive any benefits. You will not be covered your entire lifetime and your policy will not accumulate cash value like an investment account does.

Term life insurance is smart when you have debts or a time-boxed expense — something you want to ensure your dependents can afford should you pass away. This might include a mortgage or credit card balance, for example, or something like school tuition or car payments.

Wondering what Ramsey teaches about life insurance? This article covers all the types, but let's cut to the chase: we always recommend buying term life. In particular, you want a policy that lasts 15 or 20 years with coverage that's 10-12 times your annual income.

Life insurance is no longer needed for many people once they reach their 60s or 70s. At this point they retire, their kids have grown up, and they've paid off their mortgage and other debts. However, others prefer to keep life insurance later in life to leave an inheritance and to pay off final expenses.

Do you get your money back at the end of a term life insurance policy? No – unless you have a return of premium policy. However, such policies can be 2-4 times more expensive than a regular level term life insurance policy.

The pros and cons of term and whole life insurance are clear: Term life insurance is simpler and more affordable but has an expiration date and doesn't include a cash value feature. Whole life insurance is more expensive and complex, but it provides lifelong coverage and builds cash value over time.

What happens if you outlive your term life insurance? ›

When your term life insurance plan expires, the policy's coverage ends, and you stop paying premiums. Therefore, if you pass away after the policy ends, your beneficiaries will not be eligible to receive a death benefit.

Term life is often a better choice for parents with young children and a mortgage, as their family may be dependent on their income to meet basic expenses. Whole life is often more expensive than term life, but the coverage is permanent as long as you make your payments.

The primary reason individuals buy term life insurance is to replace income or cover debts like a mortgage balance if the insured dies. However, one of the reasons listed in your question, 'to accumulate savings,' is not a reason to buy a term life policy.

Companies buy life insurance policies as an investment. They estimate how long you will live and then give you a payment that's less than your policy death benefit. The company looks to make a profit by collecting the death benefit after you pass away.

Here are the most common term lengths and who they might be a good fit for. Annual renewable term life is a good choice for people who have short-term financial obligations, or who want to cover a gap in employment until they get a new group life insurance policy through their next job.

Suze Orman isn't a fan of whole life insurance, and especially not as an investment. Investment portfolios for whole life policies usually have expensive fees and are overly conservative. Keep your investments and insurance separate, and stick to term life insurance instead of whole life.

There are several ways to calculate your term life insurance needs. And while no single formula may be right for you, it gives you a place to start. The simplest and most basic method most insurance and financial professionals recommend is to buy at least 10 times your annual income in life insurance.

Although term life insurance might make sense for younger seniors who only want short-term coverage—for instance, until their homes are paid off—whole life insurance may be a better fit for a senior's financial plan. A financial advisor can recommend the best policy for your needs.