What is Term Life Insurance
Term life insurance is life insurance with coverage for a set amount of time. When that period is over, the insured may cancel the policy or pay higher amounts as premium to continue with the coverage. If the person who is insured dies within the period, the amount will go to the beneficiary.
Term insurance is the way to go if you want a cheap way of purchasing a large death benefit coverage policy with a lower premium to benefit dollar ratio.
As the name suggests, term insurance protects a person’s life for a limited period of time. You can buy this type of insurance for a fraction of the money you would have to spend for the conventional whole life insurance, which lasts as long as the policy is enforced.
There are benefits to permanent life insurance, but if you want a great discount, you should go in for term.
You can adapt term to suit your needs. You can keep it in force just as long as you need it. Guarantee periods stretch from 10 to 30 years, so you get a lot of flexibility. You may want a 30-year insurance plan so it sees you through your children’s growing up years and leaving home. You may want a source of income for a surviving spouse lest something happens to you, and this is a cost effective way to do that.
Term life insurance plans are determined by a number of factors like your age, medical history etc. For instance, if you are a healthy 25 year old, and want a policy for 10 years, term coverage will work out really inexpensive. Again, if you are nearing 60 and want a 20 year policy, it will be somewhat costlier, but still worth investing in rather than in a permanent insurance policy.
There is a major objection to term insurance in the world of insurance businesses. People assert that term premiums are often wasted. The reason is that most people feel they will survive the 20 or 30 years of term they have bought. The disadvantage is that when the term is over, the policy comes out without any value.
These days, you can go for what is technically called return of premium life insurance. This ensures that the premiums will be returned to you if you don’t expire by the time the term ends. However, many such policies come at an additional price of 60%. But if you do live to see the end of your term, it is worth the extra amount spent. We suggest you choose a straight term policy, if you want to wrap things up at the lowest cost.
