Term life insurance is an inexpensive way to get life insurance for a finite period of time. It is generally much lower in cost than whole life insurance policies, due to the fact that it retains no cash value and is designed to protect the financial health of the deceased’s loved ones. It is easy to get a term life insurance policy for applicants who are young and in good health as well.
Why is Term Life Insurance Less Expensive
Term life insurance protects the policy holder for 5, 10, 20 or 30 years depending on the applicant’s needs. Policy holders pay only for the life insurance coverage for the time period the policy is in effect. This means that if the policy holder dies during that time, the life insurance company will pay a death benefit to the beneficiaries. However, if the policy holder dies after the policy has expired, the beneficiaries will get nothing unless the policy is renewed. Some policies have a guaranteed renewable clause allowing them to be extended.
The Facts about Term Life Insurance
There are some facts about term life insurance that need to be understood before purchasing a policy however. First, the death benefit may change throughout the term of the policy depending on the coverage. It may decrease, remain the same or increase. In addition to guaranteed renewable clauses, there are also some term life insurance that are convertible. This means that later, if the policy holder changes their mind, they can “convert” the policy to another type such as a whole life policy without needing to take another medical examination.
The Benefits of a Term Life Insurance Policy
While term life insurance does not have tax benefits or a cash value like a whole life insurance plan, there are other benefits that make it an appealing option. The premiums are significantly lower than whole life insurance policies making it a very budget friendly alternative, particularly for those who are young and in good health. This is useful to young families who have a mortgage and children who will need to be raised and educated even if the primary income earner is deceased as well. In fact, for a $250,000 policy, the average cost per year is only $300-500.
Picking the Right Term Life Insurance Policy
When deciding which term life insurance policy is the best one for you, be sure to compare and review the different policies. Some policies may have exclusions or wait periods for pre-existing medical conditions, lifestyle choices or other risks. If in doubt, ask questions. However, an additional benefit of term life insurance policies is that there is a lower commission rate compared to whole life policies. This may mean an insurance agent is not as eager to sell this type of policy and may not want to spend as much time discussing the benefits.
Term life insurance can protect your loved ones from financial devastation if there the unthinkable should happen. By purchasing a policy, they will have the peace of mind of knowing that they are secure. It is important to pick the right policy through a service that will answer any questions you may have. Finding a quote and getting the answers you need is a simple process through our online insurance web quotation service. Find out how much you could be paying today.