October 08, 2009 16:54 ET

Why Term Life Insurance Is the Smart Choice in the Current Economic Environment

One Million Consumers Purchase a Life Insurance Policy Every Month, What Policy Is Right in the Current Economic Environment?

SAN FRANCISCO, CA--(Marketwire - October 8, 2009) - Every month almost one million Americans consider and purchase a new life insurance policy; and in today's economic environment, when consumers are looking to reduce costs, term life insurance offers one of the most affordable ways to protect a family, according to SelectQuote (www.selectquote.com), the nation's top term life insurance broker and the leading online source for term life insurance information and comparisons.

Although approximately one million new life insurance policies are secured every month, more than one-third of all adults carry no life insurance and the majority of those adults who do carry life insurance rely on more limited group life policies obtained through an employer.

"Life insurance is the foundation of a smart financial plan, particularly when there are family and loved ones who depend on the financial support provided by an individual," said Charan Singh, Founder and Chief Executive Officer of SelectQuote, the leading online source for term insurance information, comparisons and products. "All other financial planning can be for naught without the foundation of life insurance in place. That's why you see millions of people researching life insurance online and almost a million a month purchasing life insurance."

"Term life insurance is probably the smartest life insurance choice in the current economic environment. First, it is typically the most affordable form of life insurance and, secondly, it provides the most coverage for the dollar, the best value. That's because term insurance is pure insurance, whereas most other life insurance products are often, in essence, combined investment or savings vehicles," said Singh.

There are two basic categories of life insurance: term insurance and permanent. The primary difference is that term insurance is pure insurance. This makes it less expensive and more flexible. It pays only if death or other defined event occurs during the specified term of the policy, typically 10, 20, or 30 years. Because the policy specifies a particular time period during which an individual and his or her family are protected, the carrier is essentially taking the "risk" that the insured party won't die during the specified term, and that is a more limited risk than absorbed in permanent and whole life policies. Permanent insurance policies, such as whole life, are just that -- permanent. They accrue cash value over the insured's whole life and perform more as investment instruments than as insurance. This makes them more expensive, because, of course, everyone dies eventually and the odds are 100 percent that the insurance carrier will have to pay a claim.

Most people buy term life insurance because it offers significantly lower monthly premiums for the same death benefit as a permanent policy. Parents with young children and limited budgets might start with a term policy of 15 years -- long enough to keep their children safe until they are independent - or until greater family wealth is built up over time. If the family still needs life insurance at end of that term, when the family income is likely to be higher, they can convert to a larger term policy or one of the higher-priced permanent or whole life insurance products.

Singh said term insurance was particularly applicable in this economy for people such as (a) parents with children, particularly young children; (b) for people with older dependent children and dependent elderly parents; (c) for entrepreneurs starting a new venture or who are critical to their family or small business; and (d) even for young professionals with no dependents who are looking for an affordable insurance option.

"We buy life insurance to protect those who depend upon us. If someone you care about -- a child, a spouse, a parent or partner -- relies on your income than the most affordable and effective way to protect them is to have a term life insurance policy," said Singh, who previously served as a leader of insurance services at Charles Schwab before founding SelectQuote. Singh has more than 25 years' experience in financial services and life insurance industry.

Singh said the value of life insurance is apparent to most people, even if they do not want to think about the subject. Life insurance replaces lost income and pays for the way of life a provider gives to his or her family. It ensures that house payments are made, meals are on the table, bills are paid, and cherished dreams are realized. "Whether you are your family's primary income producer or its primary caregiver, your dependents need the security and help that life insurance provides," said Singh.

Insurance experts caution that most people mistakenly think that they have sufficient life insurance coverage through their employer. Experts say to consider such a group policy supplemental only because the "term" of such employer-provided group insurance is usually limited to the length of employment. When the individual leaves their company, the term expires, and they are no longer insured. If an employee is moving to a different job, remember that some employment benefits don't kick in right away and the insured can fall through an insurance gap. Additionally, if a person is laid off or the company fails, they are at risk when they can least afford it. Finally, group benefits are often set to a maximum benefit that can be significantly less coverage than is recommended for an individual or family's personal needs.

SelectQuote Insurance Services, www.selectquote.com, is the nation's number one term life insurance broker, offering consumers quotes and comparisons from more than a dozen of the country's leading and most highly-rated insurance carriers.

Contact Information

  • For further information, contact:
    Dan Cahill
    (917) 617-0106
    Email Contact