Which of the following best describes term life insurance? Well, the purest type of life insurance that you can ever find is the term life insurance policy. Of course, we don’t want this to happen, but in the event of your death, a monetary benefit is paid to your family or someone whom you placed as your beneficiary.
This is true if you have paid a specified amount of premium, usually depending on the terms of your policy. My friends, let’s open our minds, death is inevitable, that’s why life insurance was established to lessen your worries whenever it happens to you, for the sake of your family.
Such life insurance tends to be less expensive than when you compare it to permanent whole life insurance, but they differ greatly. Whereas permanent whole life insurance has cash value, a payout upon the policy’s expiration, and a value beyond the insurance payout, term insurance has doesn’t offer these things.
Except for the level premium, which varies based on the length of the insurance, most term life insurance policies offer level premium; and this means that the premium you’re paying for the entire duration is just the same.
Which Best Describes Term Life Insurance: Read The Following
This kind of life insurance allows you to decide on the coverage’s length; usually, it starts at five years. You also have wide discretion, whether you choose longer coverage, maybe 10 to 20 years, or even 25 to 30 years- whatever!
If you’re wondering what companies offer life insurance policies with terms of, let’s say, 35 to 40 years, we have Protective Life and Banner Life. With this, you have the opportunity to decide how much coverage you want, which can range from tens of millions of dollars to hundreds of millions of dollars.
Also, you will name at least one beneficiary whenever you decide to buy a policy. It’s important that you give utmost importance to this as the death benefit is paid if you die within the duration of the insurance. But then, once the policy has expired, you can’t expect any payouts or refunds, even if you live beyond the expiration date.
Well, term life insurance is a significantly cheaper alternative to full life insurance. Another factor contributing to the lower cost of term life insurance is that it has no monetary value; this means that withdrawal or loan of funds from the policy is not possible.
Term life insurance vs. whole life insurance
In terms of initial cost, the former is usually cheaper than the latter, which may be six to 10 times more, though with the same benefit at the time of death.
In terms of cost over time, the cost may increase as you age for the former, while it’s just the same for the latter.
A term life insurance is not permanent compared to whole life insurance. In terms of length of coverage, the former may cover from 10 to 30 years, while the latter covers lifetime given payment is made.
Do You Need A Term Life Insurance?
If you’re someone who needs life insurance for purposes of covering a huge debt or a finite time, typically get term life insurance. Undoubtedly, this insurance policy is usually attractive to families just established, or let’s say parents who have smaller children; it’s because this insurance can provide financial protection while they raise their children.
These are some of the main reasons that people get term life insurance:
- To provide an income replacement for the family in the event of an unexpected death;
- To offer a solution to large debt, for example, mortgage, to enable their family to pay it off;
- To make sure that children are ensured until they graduate, even if their parents already die; and
- To provide financial assistance for funeral expenses.
Easy Ways To Find The Best Term Life Insurance
When purchasing term life insurance, the most common factor to look at will be the price. However, price is not everything; you should also be looking at the features and benefits the policy will provide.
The first step that you should take is to know the amount of life insurance that you need. The next step is to select a predefined initial rate guarantee period. You’ll have locked in your premium rate for the duration of the contract. You can likely renew after the specified term, but at a higher rate.
Know with all your heart the benefits of your policy, the riders that come with it, and the result when there’s an expiration of the original rate guarantee. Understand the conversion window and any benefits that are associated with it carefully.
It’s A Wrap!
The type of life insurance policy that is ideal for you will depend on a variety of criteria. Whether or not you’ll get term life insurance depends on you. Anyway, you’ve already understood its difference from whole life insurance. Besides, we’ve already discussed which of the following best describes term life insurance. Hopefully, you’ve learned a lot from this article. Good luck!