Individual Term Life Insurance: Why Is It Important To Secure Your Future?
A term life insurance policy is a legal agreement that covers you for a predetermined amount of time (often between 10 and 30 years). If you pass away while the policy is in effect, the insurance company will pay your dependents a lump sum. So, let’s understand the basics of term life insurance in detail. Keep reading!
Understanding the Basics of Term Life Insurance
This insurance is to provide a financial benefit to the beneficiary of the policy in the event of the policyholder’s death – during the term of the policy. Term life insurance policies are more affordable than other types of insurance policies. They also generally provide coverage for a limited period. Furthermore, these policies may include an option to convert a portion of the policy to a permanent life insurance policy.
Term Life Insurance: How Does It Work?
Term life insurance is a type of life insurance that pays a death benefit to the policyholder’s beneficiaries. It only happens if the policyholder dies during the policy’s term. When a policyholder purchases term life insurance, they pay a premium to the insurance company. The amount of the premium revolves around the insured’s age, health, and other factors.
However, if the policyholder dies during the policy’s term, they will pay the death benefit to the policyholder’s named beneficiaries. The death benefit is usually paid out in a lump sum. If the policyholder does not die during the policy’s term, the policy will expire and there will be no death benefit.
Discover the Various Types of Term Life Insurance
Term life insurance can come in various forms, each with different features and benefits. Here are the main types of term life insurance available:
Level Term
Level term is the most common among the best-term life insurance policies. It offers a guaranteed death benefit for a set period, and the premium remains level for the duration of the policy.
Decreasing Term
A decreasing term policy’s death benefit decreases over time. While the premium (the amount you pay every month to keep the policy on hold) remains the same. People often use this policy to cover a mortgage or other loan.
Renewable Term
This is a type of policy that allows the policyholder to renew their coverage at the end of the policy period. However, it may limit the number of renewals or might not allow renewal at a certain age.
Non-Renewable Term
Non-renewable is a type of life insurance policy that provides coverage for a fixed time. The policy does not renew once the term ends and the policyholder is no longer covered. The premiums for non-renewable term life insurance are usually lower than those for permanent life insurance policies.
Convertible Term
This policy provides the advantage of converting their term policy into a permanent policy without undergoing a medical exam. It can be a good option for those who may be ineligible for a permanent policy.
Joint Term
This type of policy covers two people, usually a married couple, for the same death benefit. It has a discounted premium for both parties.
Return of Premium
It offers the policyholder a refund of the premiums if they survive the coverage period. It usually has a higher premium than other types of term life insurance.
4 Reasons Why Term Life Insurance is a Smart Move
1. Low Cost: Term life insurance is typically the most affordable type of life insurance. This makes it easier for people to purchase coverage when they don’t have the budget for an expensive permanent policy.
2. Flexibility: Term life insurance policies often allow the policyholder to convert to a permanent policy if they choose to do so.
3. Simplicity: Term life insurance policies are often simple and straightforward. This makes them easier to understand and manage than permanent policies.
4. Higher Coverage Amounts: Term life insurance policies often allow for higher coverage amounts than permanent policies, making it easier to get the coverage you need.
Term Life vs. Whole Life Insurance: What Is the Difference
It provides coverage for a specific period of time. The term policy pays a death benefit if the candidate dies during the term of the policy.
Whereas, Whole Life Insurance is known as permanent life insurance that provides coverage for the whole of the policyholder’s life. It includes a cash value component that allows the policyholder to access funds while they are still alive. It also consists of an investment factor that can assist in building cash value with time.
How to Decide Between Term and Whole Life Insurance for Your Needs
When To Get a Term Life Insurance Policy?
Term life insurance is a great choice for those who want a cost-effective form of life insurance coverage. It provides coverage for a set time period, typically. It pays out a death benefit if the candidate dies within the term. This type of policy is generally less expensive than other forms of life insurance. It makes term policy the best life insurance policy in a budget.
When To Get a Whole Life Insurance Policy?
Whole life insurance provides a guaranteed death benefit and a guaranteed cash value accumulation. Moreover, it provides a level premium so that you know exactly how much you will pay each month. Additionally, it can help to protect your family from the financial burden that comes with the loss of a loved one.
Why Can We Be Your Best Option?
With our wide range of options to choose from, you will be able to find what’s best for you. Our experienced professionals with years of experience in the industry will guide you in every step. Contact us for the best advice and policy!