Term Life Insurance
Term life insurance is a low cost, effective form of protection for a defined period of time. Like all life insurance, term life insurance provides a guaranteed death benefit to the policy’s beneficiaries. Most policy holders enjoy the security and peace of mind associated with term life insurance coverage.
As the name implies, term life insurance has a starting and ending date. When the term of the policy expires, the policy owner can attempt to replace the coverage with another term policy or with permanent life insurance. Some term life insurance policies contain provisions allowing the owner to convert to whole life coverage. Not all life insurance company’s offer this option.
Many families and young couple purchase term life because the premiums are reasonable while the death benefit remains substantial. Term life insurance is a viable safety net for an unexpected death. The death benefit allows beneficiaries to know that should the unexpected occur, they will be able to continue their lives without severe financial distress.
Unlike most permanent insurance plans, term life does not provide the accrual of cash value and does not pay dividends. Term life is strictly for persons who want the security of a death benefit. The death benefit does have several tax advantages. The death benefit is only paid upon the demise of the insured.
The insured does not have to be the policy owner. The policy owner can insure a third party. However, the owner is responsible for premium payments. Term life insurance usually is paid in monthly installments although other arrangements may be available. If payments are not maintained, the policy will be terminated.
The policy owner selects and declares the beneficiaries. Beneficiaries cannot be altered without the written approval of the policy owner. Policy owners are encouraged to review the beneficiaries on a regular basis.
Many times term life insurance is obtained to protect loved ones in the event of a tragedy. Divorced parents often use term life insurance to assure a child’s educational opportunity if an unforeseen death should occur.
The typical age of a term life insurance policy is 20 years. Coverage periods should be taken care while searching for life insurance quote online. Many times policy owners view term life a short term protection. Many times homeowners purchase term life insurance to coincide with the life of their mortgage. In the case on an untimely death, beneficiaries may then use the proceeds to payLife Insurance, Life Insurance Quote the mortgage.
As term policies age, the premiums usually increase. Policy owners can obtain projected payment schedules upon commencement of the policy.
There are two basic forms of term life insurance. With Level Term Life Insurance, the death benefit remains constant for the life of the policy. With Decreasing Term Life Insurance, the death benefit decreases as the policy ages. Usually the decrease occurs annually. Policy holders will be provided a death benefit statement upon origination of a Decreasing Term Life Insurance Policy. While term life does not generate cash value or equity, it does provide a stabilizing death benefit.