People often call term life insurance "temporary life insurance." People buy term life insurance to protect an asset for a set amount of time. Due to the shorter time periods, the rates for term life insurance are much lower than those for permanent plans. People buy level-term insurance to cover short- to mid-term obligations. The lengths of time can be 5, 10, 15, or even 20 years. A level term policy is often used to cover short term debt. Short-term debt is a big part of most family budgets. In a short amount of time, families buy cars, appliances, furniture, and many other things for the home that they have to borrow money to pay for. When you buy these things, people often try to get you to buy credit life insurance to cover your debts. To cover this kind of short-term debt, it would be cheaper for a family to buy a level term policy or rider.
Level term policies are better than credit life policies because the insured can choose who the policy is for. Most of the time, the credit company is the beneficiary of credit life insurance, so the person who bought it doesn't get to choose what to do with the money when they die. Buying level-term policies is a better way to protect yourself from inflation. The decreasing term policy costs less, but it doesn't cover as much. The cost of goods and services never goes down, so a level term policy will at least keep its original face amount for the whole time period.
You might want to compare rates that stay the same and rates that go down. The difference may not be that big, so it may be better to buy level term insurance in the long run. The best way to plan for life insurance is to start with permanent insurance for long-term needs and add term insurance for short-term needs. Level term life insurance is a great choice for paying off debts in the short or medium term.
