by 
The Curious Bag
-
<h4 class="dechead">On One Hand: Only Replace Lost Income
Term life insurance offers an individual a death benefit paid to his beneficiaries if she dies within the time period the policy is in effect. The primary purpose of term life insurance is to protect the beneficiaries from the loss of income of the policy holder. According to the American Council of Life Insurers, a person should buy enough term life insurance to replace lost income.
On the Other: Also pay Debts, Education Costs
If an individual dies owing debts, such as a mortgage or car payments, these must be paid by his estate. Also, according to the Oklahoma Department of Insurance, future education costs, including providing for a child's college tuition, are also factors to be considered when buying term life insurance.
Bottom Line
Although replacing lost income is the primary purpose of term life insurance, other factors also come into play, making it difficult to decide on the exact amount of coverage to purchase. Because of this, many experts suggest seeking the advice of a financial planner before buying term life insurance.
Source:
American Council of Life Insurers: What You Should Know About Insurance
Oklahoma Department of Insurance: Choosing Your Life Insurance Policy
Resource:
Kiplinger.com: How Much Do You Need
RELATED QUESTIONS
Copyright 2023, Wired Ivy, LLC