Term Life Insurance - What Should I Know?

Term life insurance is generally the least expensive type of life insurance. It is an insurance policy which provides a benefit for the insured, if the insured dies in the period of time, or the term, that they are covered.  If the policy holder is still living at the end of the term, the insurance policy will expire, giving no value to the policy holder.   However, if the insured dies within the term of the life insurance policy, having all required premiums paid up to that point, their beneficiaries will receive the amount they have selected.

For example, lets say that Bill, a 35-year-old in good health, selects a 10-year, $100,000, term life insurance policy for a $30 per month.  Bill is diligent in paying his premiums, and at the end of the ten year policy he is still alive.  Bill then ends up with no life insurance benefits.  At this time he has the option to select another term policy, which will often times have a higher premium because Bill is now older and possibly in lesser health, he also has the option to not have life insurance, or go with a whole life insurance policy.

For another example lets take Bill and his same ten year policy and say that Bill dies within that ten year period he is covered.  Bill was still diligent in paying his premiums, therefore his family, or beneficiary will receive $100,000. 

Although you are not guaranteed to die in the term that you have selected in a term life insurance policy, term life insurance still has many benefits:

1. You will have a low premium rate ($30 per month instead of $100 per month for whole life)
2. The policies are very simple and easy to understand
3. As a policy holder, you are able to make decisions.  You will be able to decide the amount of time you wish to be covered, whether it be 10, 20, or 30 years, until the kids are out of college and can support themselves, or until your mortgage is paid off.  The policy holder will also get to decide the amount of coverage they want, whether it be $100,000 or several million dollars.  You need a policy that will will meet you needs and ensure tyour loved ones are cared for when you’re gone. 

Term life insurance is comparable to health insurance.  You are constantly paying a premium for health insurance, but never know if you are going to get sick, injured, or even ever use your policy. You keep that health insurance around knowing it is as a safety net, and if anything severe where to ever happen to you or your family you would rather be safe than sorry.

Term life insurance is just like any other form of insurance in that you are minimizing risk. There is a risk that you could die, so you make regular, relatively small payments to a company so they will bail you out if something major happens. You want insurance to make up for the unknown. If you knew when you were going to have hospital bills, you wouldn’t have health insurance until a few months before. If you knew when you were going to die, you wouldn’t get term life insurance until the month before.

• I Love Social Bookmarking
  
  • Subscribe
  • Digg
  • del.icio.us
  • StumbleUpon

Tags: Term Life Insurance

This entry was posted on Monday, January 7th, 2008 at 12:16 am and is filed under Term Life Insurance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.