2. Use a 10-year life insurance to supplement your existing life insurance
Buy a ten-year insurance to supplement your existing life insurance.
Maybe you planned ahead when you were young and bought life insurance right after your firstborn. You locked in a very low premium payment for a 30-year, $ 250,000 long-term policy. Perfect.
But 15 years later you are now 40 and realize that your $ 250,000 life insurance policy does not cover your $ 400,000 mortgage. Instead of applying for a new $ 500,000 30-year coverage policy, you can choose to add your current coverage to a new $ 250,000 10-year coverage policy.
This will ensure that you have an adequate amount of coverage over the next ten years while paying off your mortgage and through your child (ren) during your college years — without being overinsured.
»See what's right for your needs and budget with our life insurance needs calculator
3. Use a 1
0-year life insurance to secure a loan
Buy a 10-year life insurance to protect a loan.
Whether you need to take out a personal or business loan, lenders need to know how you plan to repay the loan. They also like a backup plan as an assurance that they will not lose money should you die unexpectedly before your loan is paid off in full.
Lenders will be more likely to approve your loan if you assign a life insurance policy to guarantee payment even in the event of death.
4. Use a 10-year life insurance for retirement planning
Buy a 10-year insurance if you are close to retirement.
Life insurance is mostly bought to cover the most financially vulnerable years, such as when your children are small and you have quite a few years left on your mortgage.
Other times, you buy life insurance to protect financial liability that may arise later in life, such as buying a vacation home or your adult child's graduate education.
For example, let's say you're 55 years old and you and your spouse are finally buying that dream apartment by the sea. It will be a great place for your children and grandchildren to visit.
However, one of your children has not finished college and tuition is not cheap. You have savings and your social security benefits will start soon. You want to be sure that if the unexpected happened, your spouse would not have to sell the apartment and your child could finish graduate school.