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Term Life Insurance

Term Life Insurance

When shopping for life insurance, most people decide between Term life insurance as a simple and, in most cases, inexpensive way to provide cash to their loved ones after their death, although it does expire at the end of the term i.e., the length you purchased the term policy for. Term life insurance gives financial protection to your family by paying out the death benefit to your family in the event of your passing. The downside to purchasing a term policy is that if you outlive the term of the policy there will be no death benefit since the policy has already expired.

What is term life insurance?

You can think of term life insurance as renting your insurance just like renting your home. Term life insurance is less expensive than a permanent life insurance policy since this type of insurance only gives protection to the policyholder in the event of death before the term is up.

The payments made to the insurance company does not accumulate cash value like in a permanent policy, that could have been used later by you or your loved ones. Most term policies have premiums that are guaranteed not to change up to a certain period and the older you are, the higher the premium will be, based on your offered health rating from the insurance company.

The term life insurance coverage length starts at ten years. Generally, policyholder choices are 10, 15, 20 & 30 years. Some companies can offer up to 35 years of term life insurance policy and some companies offer “return of premium” life insurance. If the policyholder is alive and the term expires then the insurance company pays premium payments to the policyholder but this is becoming much less common.

Benefits of term life insurance:
  • A death benefit paid out to your loved ones at a very affordable cost.
  • Term life insurance gives you flexibility that when you can’t buy any new life insurance for medical reasons, you can turn your term policy into permanent life insurance, at the premium rate of your current age.
  • Term life insurance gives you the ability to choose the length and coverage of the insurance you need.
  • Term life insurance also helps you to protect and get you approved for certain business loans.

How many years of term life insurance does an individual need?

Besides your current age there is a very simple and easy way to calculate the length of term life insurance you need; it should last as long as your oldest debt. The death benefit amount you should choose, should cover the remaining costs when you subtract debt from your existing assets and be sure to include funeral costs. The last thing you want to do is leave your family and or loved ones in debt at your passing.

Types of term policies
  • Premium level policy
  • Yearly renewable term
  • Return of premium
  • Guaranteed issue

To get more details of Term Life Insurance click here.