Term Life Insurance
Term life insurance is one of the cheapest and easiest to understand types of life insurance. It covers you for a specific period and can be a flexible source of coverage. In this article, we will go over the basic characteristics, types, and usefulness of term life insurance.
Term life insurance is designed to cover you for a specific period. This means that if you pass away outside of the “term” your beneficiaries will not receive your death benefit. Additionally, it carries no cash value. Its main purpose is to insure against the loss of income due to your death. Because of this, premiums are for term insurance are very low.
Your premiums will be based on your death benefit, age, gender, health, and life expectancy. As well as if you smoke, your family history, your occupation, and any medications you are taking. The younger you are, the cheaper your premium will be. Typically, you cannot purchase a policy once you pass the age of 80. The sooner you purchase, the better off you will be.
Types of Term Policies
There are three types of term life insurance policies: annual renewable term, level term, and decreasing term. Annual renewable term provides you with one year of coverage at a time, with the option to renew annually. This will provide you with the lowest premium to start, but the premium will rise each year as you age. If you purchase a level term policy, you purchase coverage for a specific period. This is usually for a period of 10, 20, and 30 years. Level term gives you an unchanging premium for the entire period. The last type is a decreasing term policy. The death benefit of this type of policy declines each year but the premium remains level. This type of policy is typically used with a mortgage and declines with the loan.
How to Utilize a Term Policy
Term policies are great for younger people and those with young families. They are also great if you are looking for an inexpensive life insurance coverage. It is a cost-effective way to provide your loved ones with coverage to help pay off your mortgage, cover last expenses, and replace your missing income.
Term Verses Permanent
You may be wondering the differences between term and permanent life insurance. The main difference is the coverage period. Term only covers you for a set period of time, where as permanent covers you for your entire life. The other difference is in price, term insurance is far less expensive than permanent. If you feel you cannot afford permanent, but you would like the security of permanent without the immediate price, there are some term policies that allow you to convert later.
Purchasing a Term Policy
If you think that a term policy is right for you, the next step is to shop around for quotes. At Wealth Guardian Group, we can help you shop around for the best price at several of the top-rated insurance companies. We will find something for the best price, that is safe and secure. You can contact us today to schedule an appointment for a quote.
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