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Level Term: Protecting your loved ones when they need it most.

Although the high school curriculum in most states has undergone major changes in the last ten years, one critical gap remains. No one ever teaches young people that life insurance is an important part of family planning. Consequently, too many people end up with high mortgages, several children, and too little protection in the event of disaster.

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Fortunately, there is a low cost solution. Level Term life insurance is a type of policy that will protect your family for a very low premium and for the number of years you select, usually 15 to 20, although a few companies even offer 30 year terms. Term life is very inexpensive because it is a little bit like renting. You are paying the cost of insurance and fees for the selected term, and if something happens to you, a company will pay the face value of your insurance to your beneficiary. The money will be tax free, so your loved ones will be able to use it to pay off the mortgage or to put children through college—or just to survive until someone else can replace you as the primary wage earner.

The primary advantage of Level Term is that it is inexpensive, and the premium will not change until the end of the term, so you have no surprises. However, it is not an investment, as it builds no cash value, so don't purchase more than you need. The best way to calculate your needs is to add up all your bills, including what you spend on food and incidentals every month, to determine your financial needs for one year. Multiply that by 5; the result is the minimum life insurance you should have.

Another advantage is that you can usually protect your entire family for one premium. A spouse rider will cover your spouse for the same time period as the original policy, after which your spouse will be able to convert the rider to individual whole life if the need exists. A single premium addition—as low as 5.00 on many policies—will cover all of your children to age 18. Additional children can be added with simply a phone call. You can also purchase disability riders that pay your premium if you become disabled, and double indemnity riders that double the face value if you are killed in an accident.

Level term life provides coverage with a face value and premiums that do not change during the initial term, but it does not actually expire at the end of that period. Nearly all Term policies are guaranteed renewable to a certain age—determined by the company. If you renew it, you will usually be eligible for any type of insurance offered by that company—choices ranging from annually renewable term to whole life. Some companies will give you partial credit toward a conversion to whole life, so remember to ask the question. If you renew your policy with the same face value, and leave it as term, your premium will begin increasing every year. However, in 20 or 30 years, you may not need a high face value. Thus converting to whole life with a much lower face value may still be within reason in terms of premium. Use our online service to shop your best rates.

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