What Is Term Life Insurance

Term life insurance can be basically thought of as a “no frills” type of life insurance. This type of life insurance is defined for a specified duration limit, or time. A special contract is to be signed to purchase a specific amount of coverage for a specific time period. You pay for that coverage period and at the end of that specific term or period the policy expires. Examples that can be considered, the term until retirement, or until children are grown, or until college is paid for.
Term life insurance is considered to be the least expensive available insurance policy in the market and allows you to spend a lot less and use the money that you saved in a better investment. It does not build up the cash value and the premium normally increases as the owner of the policy gets older. Usually term life insurance covers a specific term such as term of 1 year, 20 years or 30 years.
Life insurance
While the policy is active if its owner dies, term life insurance provides a stated benefit for it; and your survivors will be paid the amount that was agreed upon. However, the policy does not provide any kinds of returns beyond the stated benefit and once the policy expires, the insurance coverage ceases and the insurance company gets to keep the money. Some term insurance policies provide you with the freedom of renewing at the same rate for multiple years, while others do not. The former term insurance policies are generally a bit more expensive.

Times when term life insurance is most suitable for you:

•             If there is a need of coverage for a limited period of time,
•             If you are young and looking for lower premiums,
•             If you are buying a home or car, where the financial burden of a loan will disappear in time.

Benefits of term life insurance:

  • Get a lump sum amount in the even sudden death
  • See off all your loans and liabilities
  • Money is provided so that your family continues to live with pride
  • Get lump sum amount if you are diagnosed with critical illness
At the end of each term, term life insurance must be renewed. It is advised that you should ask for the renewal provisions for the protection of your future insurability while buying a term life insurance. There are some typical choices:
•             Annual Renewable-----the premium go up each year.
•             Level Term-----the premium stays the same for specific period for example 5, 10, 15, or 20 years, then increases sharply.
•             Automatic Renewable-----you will have to pay more for this feature.
Other options on term life insurance policies can be considered:
•             Re-Entry – For this a lower premium is required than an automatically renewable policy. You can renew at the same low rate offers to new customer; but you will have to pass a physical examination. If you have developed any health problems, your premium could go up and cost more than an automatic-renewable policy.

•             Convertible term – you will have the option to convert your term life insurance into a whole life insurance policy in later years.
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19 November 2019 at 21:08 ×

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