Who needs it and why? Term life insurance – 2023 Updates

You are currently viewing Who needs it and why? Term life insurance – 2023 Updates
term life insurance

With term life insurance you can shield your dependents at a particularly low price.

And that’s why life insurance is so popular – but for whom is it particularly worthwhile? We shall explain the most important points in this post.

Affordable coverage for surviving dependents

term life insurance

Because no capital is built up with it, there is great protection for comparatively little money. This is particularly important for parents and couples with one main breadwinner.

After all, statutory coverage is generally not enough to guarantee the standard of living if one of the partners dies early or unexpectedly.

The reason for this lies in the system: payments from statutory pension insurance are based on how long and how much a person has paid in contributions.

If someone dies before entering retirement age, the entitlements are correspondingly low.

Unfortunately, this happens much more often than one would expect: every 6th person who dies is younger than 65.

Those with children meet an even higher difficulty.

The surviving partner may have to cut back on his or her professional activities in order to care for the offspring.

In this case, the money from term life insurance does not help to overcome the grief, but at least it ensures that the family does not run into financial difficulties that threaten its existence.

  Life insurance for seniors - is it worth it?

By the way, it’s easy to calculate how much coverage you should have in your individual case.

Our virtual insurance expert Melanie will be happy to help you with valuable tips.

Insuring loans

At some point, most of us have to make a particularly large investment, such as buying a property.

To raise the purchase price, part of the sum is often financed.

But what happens if one of the earners dies while still in the repayment phase? There is a threat of a distress sale and foreclosure.

Here, too, term life insurance offers the most convenient and inexpensive protection.

If desired, it is even available with a so-called “falling” sum insured linked to the respective residual debt.

This is where residual debt insurance comes in handy. The insurance kicks in if the worst comes to the worst and secures the property for the family members.

By the way, many banks even insist on taking out term life insurance to cover their real estate loans. Learn more about the various types of term life insurance.

Business partners protect each other

term life insurance

Mutual coverage for self-employed persons is a special case.

When two or more partners decide to set up something together, it costs a lot of time, money, and energy, especially in the first few years.

If one of the partners dies, the joint project is in danger, employees may have to be laid off, and more.

To stop this from occurring, there is term life insurance.

Thanks to it, at least the financial risk becomes manageable.

What term life insurance coverage makes sense?

Term life insurance is more flexible than almost any other insurance.

  What to look for in term life insurance? - 2022 Updates

There are many different ways to protect surviving dependents in the event of death. With a partner term life insurance, partners can cover each other.

Here, a contract is taken out on the lives of two people, and the sum insured is paid out to the other in the event of death.

It is particularly recommended for childless couples or business partners.

In the case of “cross-insurance,” two contracts are taken out by two people, each ensuring the life of the other.

In the event of death, the sum insured is paid out to the other person and their own contract remains in force.

If both policyholders die, the sum insured is paid out twice to the surviving dependents. This is particularly worthwhile for unmarried couples: in this case, no inheritance tax is due.

As a third option, two individual contracts can be concluded, with the other being made the beneficiary in each case. This option is particularly useful for married couples due to the high tax allowance.

And if both policyholders die at the same time, for example in a car accident, the surviving dependents are also doubly covered here.

We have summarized all the important information for you here.

Our last saying on term life insurance:

That depends on your individual needs and circumstances.

If you are looking for a policy that is relatively cheap and provides coverage for a specific need, then term life insurance may be a good option for you.

Professional tip for single parents

term life insurance

More and more children are growing up with only one parent.

Many single parents, therefore, designate their underage children as beneficiaries under term life insurance.

  What are the advantages of term life insurance?

Our experts recommend appointing a guardian until the child reaches the age of majority to manage the money in the event of a claim.

Otherwise, a guardian will be appointed by the court.

In the worst case, this can delay payment of the sum insured.

Because as long as no guardian is appointed, we are not allowed to payout – no matter how urgently the money is needed.

Adventage on term life insuarnce:

One of the main advantages of term life insurance is that it is generally much cheaper than whole life insurance.

This is because the death benefit is only paid out if you die during the term of the policy, which is typically 10, 20, or 30 years.

Another advantage of term life insurance is that it can be a good way to provide coverage for a specific need, such as a mortgage or a child‘s education.

For example, you may want to purchase a 20year term life insurance policy to cover the length of your mortgage.

Or, you may want to purchase a 30year term life insurance policy to cover the cost of your child‘s education.

Conclusion on Term Life Insurance

When it comes to life insurance, there are many different types and levels of coverage to choose from.

But when it comes down to it, term life insurance is one of the most popular and affordable options available.

Here’s a look at some of the key benefits of term life insurance:

  • -It’s affordable: Term life insurance is one of the most affordable types of life insurance you can buy.
  • -It’s flexible: Term life insurance policies can be customized to fit your specific needs and budget.
  • -It’s easy to understand: Term life insurance is a fairly simple and straightforward type of insurance, which makes it easy to understand and purchase.

So, if you’re looking for an affordable, flexible, and easy-to-understand life insurance option, term life insurance may be the right choice for you.