We are bombarded everyday with telemarketers, radio ads, and TV commercials talking about insurance — and how important it is to have it. Well, it seems as if there are hundreds of different kinds of insurance policies, but one that may be important to pay attention to is a term life insurance policy.
A term life insurance policy is insurance covering you for a specific, predetermined amount of time. With a term life insurance policy, you choose the amount and duration of your policy’s coverage. Paying your premiums in a timely manner guarantees you coverage for the duration of the term life insurance policy. Typically, insurance companies offer policies with terms in five-year increments, but some insurance agencies also offer one-year policies. Most of the policies are renewable at the date of expiration.
A term life insurance policy does not have any additional saving features and, as such, you are not entitled to any compensation once the policy expires. Within the term life insurance policy, you can take out loans though your insurance company with the death benefit as collateral. This will, however, decrease your death benefit until the loan plus interest is paid. You should be aware that a term life insurance policy has age limits for renewal. Most insurance companies will not let you extend past the age of 70.
There are certain advantages to having a term life insurance policy. The basic life insurance is designed to offer coverage for a specific number of years at a very low cost. This makes a term life insurance policy especially attractive to those who don’t have much money, but who need some kind of protection. This means that without spending huge amounts of premiums, you can have the security of a good term life insurance policy.
Depending on your needs and financial situation, you can either purchase a shorter, less expensive policy or a longer, more expensive one. Usually, a term life insurance policy is available for any amount of time, so it’s ideal for covering financial responsibilities such as a loan or a mortgage. If you don’t feel the need for a policy offering coverage for the rest of your life, a term life insurance policy is the most sound financial investment.
Usually, a term life insurance policy is bought with a set amount for the death benefit. However, some insurance companies will offer variations on the traditional term policy. Under term life insurance policies, and at your demand, the death benefit of your policy and your premiums can increase or decrease at different intervals. Therefore, if you purchase a term life insurance policy to cover a debt, but want the policy’s death benefit to decrease as you pay off the debt, you can easily combine the two. In terms of cost, a decreasing term life insurance policy is often less expensive than the conventional term policy, while an increasing term life insurance policy is often more expensive.
It is important to remember that before a term life insurance policy is issued, you will be required to undergo a medical examination. Depending on the results of your examination, a term life insurance policy may or may not be issued. Some insurance companies have you undergo medical examinations each time you want to renew the policy.
By John Ivie