Insurance such as term life insurance should be looked at as a top priority in your personal financial portfolio.

Term Life insurance benefits include a higher face value death benefit at a lower cost than other traditional insurance vehicles.  A term policy can be effectively used to cover and secure a home mortgage loan though a decreasing term policy.  While the debt reduces, so does the payout and the cost of the coverage.  Term life insurance also is generally offered through an employer-employee relationship to extend coverage while you are an employee of any company. The uses of term life insurance are pretty diverse covering numerous scenarios.   They are very beneficial  because of the lower costs involved.

Whole life insurance and counterparts like universal life, single premium, whole life et all, can have their benefits.   A whole life insurance policy will be gaining  in cash value,  and face amount during the length of its coverage.  It also provides policy loans against the cash value of the policy. Survivor benefits are tax-exempt.  Taking out a small Whole life insurance policy at an early age “insures your Insurability”, meaning that you will always be covered so long as you pay the premiums.   These benefits are significant but come with a lofty price.  It is being wise to have a smaller whole life policy to take advantage of the above positives, but having a term life insurance policy for big death benefit amounts at a reduced cost is beneficial.

 Examining some scenarios as an example.  Taking Thomas for instance. Thomas got married at age 25, has a good job and is thinking about starting a family.  Thomas is making a modest $35,000 a year with a reliable company.  As Thomas is planning for the future at age 25, it is a good decision to be investing in his first life insurance policy.  He should “insure his insurability” by taking out a modest $10,000- $25,0000 and be using a variation of one of the many forms of whole life policies. By starting his first insurance with a small whole life policy he can never lose that coverage so long as premiums are being paid or are accumulating or existing cash value can cover premium payments. 

After Thomas is successful in securing the whole life policy,  he should be attempting to purchase a term life policy for an amount equal to 10 years of accumulated replacement salary. As Thomas is presently earning $35,000 a year he should be purchasing a term life insurance policy with a face value of 350,000.  He should be checking with his employer for group term life insurance at a low cost.  The premiums payments can be taken directly out of Thomas's check and he can be happy in the knowledge that his new family will be covered in the event of his untimely death.

Thomas and his wife have discovered a nice house. Having qualified for their mortgage they are moving into their dream home. Thomas being responsible financially and wishing to provide protection for his family sought out a decreasing term insurance policy to cover the mortgage payment on his new home.  The decreasing term insurance policy is set up in such a way that the face amount or payout amount lowers as the mortgage loan amount lowers. In the case of an untimely death, Thomas's house mortgage loan would be paid in full and Thomas's family would  have no worries regarding monthly mortgage payments. 

On Thomas's 30th birthday his wife announced she was getting ready to have a baby. Thomas's financial picture has improved greatly during the past five years and is now earning $50, 000.  Keeping with the 10 years of replacement income strategy, Thomas should be increasing his term life insurance coverage to $500,000 face value death benefit payout. 

As Thomas and his family continue their lives together, the responsible and financially sound Thomas increases his term life insurance coverage to coincide with his rising income.

Thomas's smart fiscal policy of using term life insurance rather than whole life insurance has allowed him to purchase greater coverage at lesser expense.  The amount of savings in Thomas's budget from purchasing term life insurance as part of his financial plan has allowed Thomas to also invest in an IRA and other investments for his retirement.

Thomas has used smart financial decision making to cover his family in the event of his untimely death. In Thomas's case his house would be paid off, due to his decreasing term life insurance policy.  Thomas's family would receive a death benefit greater than 10 years of his combined future salary through the use of his term life insurance policies.