Term Life Insurance Buyers Guide

A term life insurance policy is a form of life insurance that provides a stated benefit when the holder passes on only if the death occurs within a time period specified in the policy. The policy does not provide returns outside of the benefit stated. Coverage is provided at a fixed rate of payments for a limited time period known as the relevant term. After the expiry of the relevant term, the client cannot be guaranteed that he will receive coverage at the previous rate of premiums. At this point, he will either abandon coverage or secure more coverage under different conditions and terms of payment. The death benefit is paid to the beneficiary in the event of the client’s death within the term.

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The simplest version of term life insurance is a policy which contains a term of one year. The insurance company would provide the beneficiaries the specified death benefit in the event of death of the insured within a year. It is rare for anyone to seek this form of coverage.

UNDERSTAND THE USAGE OF TERM LIFE INSURANCE POLICIES

Term life insurance represents a pure death benefit and therefore, provides coverage of financial responsibilities for the client. Among such financial responsibilities are consumer debt, dependent care, college education for dependents, mortgages and funeral expenditures.

ADVANTAGES OF TERM INSURANCE

Term life insurance is generally preferred over permanent insurance because it is the most affordable life insurance option available. This, however, depends on the length of the term specified in the given insurance policy. Term insurance is also less expensive than universal or variable insurance. The coverage periods in the term insurance are very specific. These may be typically in terms of 10, 15, 20, 25, and 30 years. This permits the candidate to only purchase as much coverage as he requires. For instance, if one is only concerned about life insurance while he has dependents at home or as long as he has mortgage to pay, he can accordingly plan the duration of the insurance needed.

DISADVANTAGES OF TERM INSURANCE

The insurance policy does not have cash value in contrast to whole life insurance. The premiums of the insured maintain the policy but never earn interest or otherwise accumulate. There are drawbacks to having a specific term. For instance, if someone has a 25-year insurance policy and wishes to extend his coverage, he may be required to undergo proof of insurability. He may be either denied further coverage or he may have to renew the policy at a much higher premium. Click here to get a FREE life insurance quote today!