When you think of life insurance coverage levels of $500,000, $1 million or even $3 million, a $250,000 term life policy might not appear to be a substantial amount. But let us be clear, $250,000 is still a lot of money and would have a huge, positive effect on a family if their loved one died. For just one example, it's roughly the cost of a fresh Italian sports car. Who needs much coverage? And just how much does a $250k term life insurance policy actually cost, anyway?
We've broken it all listed below, such as the questions you will need to ask to determine if your quarter-million-dollar policy (or even a $200,000 policy) fits your needs.
Who needs life insurance?
Let's start here – in the end, term life insurance isn't right for everybody. (And yes, we understand this isn't an argument most life insurance agencies selling term life typically make.) In a nutshell, term life insurance is a way of providing financial protection for family just in case something happens for you within a set period of time (aka, the word).
If you die before the policy term ends, your designated beneficiaries will get the full worth of your policy from the life insurance coverage company – in this case, $250,000 – which may be used to cover both short- and long-term expenses. These might include obligations such as the price of burial, paying off the rest of your mortgage, even future tuition bills. This $250,000 life insurance coverage payout is typically tax-free, and could be thought of as a financial safety net for when so if you feel not around. And if you do not die before your policy term ends, great news: You are always here.
For probably the most part, for those who have individuals that rely on you to definitely purchase things, you most likely must have life insurance coverage. Most commonly, this would mean having children who rely on you for food, shelter, Legos, and so on. This might incorporate a spouse or partner with whom you share the cost of living, from rent or perhaps a mortgage to groceries. This might also include a maturing parent, a relative with special needs, even a pet. (It's not like your dog ever volunteers to pay for Purina.) Life insurance coverage is a method of helping make sure that your family can to deal with obligations, even after you're no longer there to cover them.
In short, you should think about getting life insurance coverage if (but not only if):
- You're a brand new parent (or likely to become one).
- You and a partner or spouse share expenses or any other financial commitments.
- Other people rely on you for his or her bills.
- You're concerned with leaving behind a legacy.
So who needs a $250,000 term life insurance policy?
In general, the rule of thumb is that you should multiply your annual salary by five to ten to find out how much life insurance coverage you'll need. Reverse that math, and you'll observe that a $250,000 policy suits somebody that makes between $25,000 and $50,000 per year. (If you're for the reason that range, you might also think about a $200,000 policy, that is suitable for somebody that makes between $20,000 and $40,000 per year.) There are reasons why that figure might vary – if, for instance, you are the family breadwinner, you will need to multiply your base salary by even more, then you may need more insurance coverage than $250,000 can provide. However in general, that rule of thumb is really a rule of thumb for a reason.
Paradoxically, which means a $200,000 or $250,000 policy might be right for someone just starting out, who's currently at the lower end from the salary spectrum. Or it might make sense for somebody closer to retirement age, who is looking for a policy to bridge the space between an expired policy and, say, retirement, or even the kids sounding to college.
Based on the salary-based rule of thumb outlined above, and the reality that, for most people, it does not seem sensible to hold term life insurance policy once their property is paid off and/or their kids have finished college, you will find roughly two categories of individuals who may want a $250,000 term life policy:
- People who make between $25,000 and $50,000 per year
- People who only need a couple of years of coverage
This may include parents of middle school-aged children, or someone nearing the end of their mortgage repayments. Ultimately, the ideal entire term depends upon a number of factors, as well as your age and all around health. And as you can see from below, this degree of coverage costs only a bit more of computer takes to fill up your vehicle with gas.
What does a $250,000 life insurance policy cost?
In general, a $250,000 policy is one of your less expensive life insurance options. (The reality is, you could have too much life insurance – something else you never expected to hear from a life insurance agency.) The life span insurance rate will depend on the length of your term, your age and your health at the time you apply, along with a selection of other factors. When the life insurance coverage rate for any $500,000 policy exceeds your monthly budget, and also you wisely don't wish to go without coverage, a $250,000 policy or perhaps $200,000 policy might be a good fit. (And you may always purchase additional coverage as your budget changes.)
You can get an estimate online, or just take a look preview of what you may expect to pay with this insurance product if you're a non-smoker in excellent health.
Average premium payment for a $200,000 or $250,000 term life insurance policy
Finding the right coverage for you
The reality is, there are a lot of variables that go into determining how many years and dollars of coverage you should get. The lists above are by no means exhaustive, and there's no shortage of explanations why you might need life insurance coverage, even beyond what we've mentioned already.
The best spot to begin? A web-based life insurance calculator. On average, a Haven Life customer gets 20 years and $600,000 in coverage. That may or may not make sense for you. Haven Every day life is dedicated to ensuring you get forget about, but no less, coverage than you need and may afford. Whatever life insurance product you choose, you will get the added bonus of inner peace – or, at the very least, the safety of knowing all your family members is going to be deliver to, come what may.