Term Life Insurance
What is term life insurance?
Term life is a type of life insurance policy that covers the policy owner’s beneficiaries if he or she were to die during the term of the policy. A premium is paid monthly during the term that is set forth for the policy. If the owner of the policy outlives the term, he or she buys another policy.
Who is this type of insurance for?
This type of insurance policy is for any adult who wants to protect his or her family after death. A life expectancy estimate is given for the term. Those who set up a policy when younger have a lower premium, whereas those who are older when setting up the policy have a higher premium.
How does this type of insurance work?
This type of policy has a death benefit that is set upon opening of the policy. This benefit is used to cover funeral expenses, debts, mortgages or lost income. It can be used by the beneficiaries in any way desired, however. Multiple beneficiaries or only one beneficiary may be chosen for the policy.
What are the different types of term life coverages in existence?
Level premium is the first type of coverage in which the policy stays the same throughout the term. Policies are able to be automatically renewed but the rates will probably go up significantly. The annual renewable term policy is another type of coverage that allows the owner to renew the policy annually for a set number of years. Rates do go up yearly and life expectancy is reevaluated. Return of premium is a type of policy that pays out premiums if the owner outlives the term, but the owner does pay a higher premium. A guaranteed issue or simplified issue type of policy are utilized when there are preexisting medical conditions and there is no medical exam. This allots for a significantly higher premium. Final expense is the final type of coverage that is very simple and only pays funeral expenses. An owner is automatically approved and there are higher rates.
What are the major benefits of these types of policies?
This type of insurance offers lower rates than other types with a shorter commitment. It also provides a high amount of coverage. There is no cash value but there is a larger death benefit with this type of policy.