Term life insurance is the simplest and cheapest type of life insurance. In simple terms, it covers the policyholder and his or her loved one for the specified time in the policy. Should you die within the period specified in the policy, the insurance provider will give your family a death benefit that you have agreed on in the policy.
How does it work?
As mentioned earlier, if you but a term life insurance policy and you kick the bucket while the plan is still active, the insurance firm will pay out the full death benefit once, income tax-free to your named beneficiaries. The can then use the money as they wish to replace the loss of revenue.
Term life insurance options
Term life insurance is secured for longer periods like ten, twenty or thirty years. During this time, the level of coverage and premiums remain the same. When the specified term in the policy end so does your protection. What is even more exciting about a term life insurance plan is that you can cancel it anytime you wish. Most of the people who purchase this type of policy want to protect their income for as long as they remain employed. When they have accumulated enough savings, social security and investments to generate enough income, they retire and cancel their policies.
Is term life insurance better than other life insurance policies?
A term life insurance policy is much cheaper compared to permanent life insurance because its premiums cost a tenth that of permanent life insurance. The key reason is that term insurance is meant for protection and only covers the holder for as long as they pay the premiums. Term life insurance is different from permanent life insurance because insurance companies charge higher premiums for permanent life insurance as you grow older to cater for the future higher mortality costs. They then invest a fraction of the higher premiums into an account that builds cash value that could settle the increased mortality costs and keep you covered for life. That is why you should be a little keener before paying for permanent life insurance. None of the two insurance policies is better than the other, they are just different and do what they are designed to do.
The chief issue with term life insurance is that it only offers brief coverage for the specified period and there is nothing you will get from it if the term expires before you do.
How to shop for term life insurance
Get several quotes from different insurance providers if you are in good health. Some of the most important facts that you should consider when shopping for term life insurance include the length of time and coverage amount among others.
If you have people that depend on your income its a grand idea to give them proper financial protection. So use a few minutes of your time to get a quote or further discuss your situation. You will be taking the initial move toward offering your loved ones proper financial protection no matter what. You will be amazed at how it’s economical to secure the term life insurance policy that you want.