There are many types of term life insurance policies available and even more variety when it comes to companies offering insurance. Having many choices available is a good thing, unless the variety becomes overwhelming.
Our quote service can provide consumers with the best options and prices from insurance providers. However, it is important to know some of the basics.
What is Term Life Insurance?
Term life insurance provides coverage for a specific period of time. If the insured person dies during the time period covered, the beneficiary will receive the life insurance benefits specified in the policy. This coverage only lasts during a certain time period or “term.” Once that term is over, there is no coverage. There is also no coverage if the policy premiums are not paid and the insurance lapses. Unlike some other types of insurance, there is no cash value to term life insurance policies, meaning that there is no investment or payout at the end of the policy. There are a few different types of term life insurance available, including annual renewable, level, decreasing and increasing.
Annual Renewable Term Life Insurance
This form of term life insurance is renewable on an annual basis. At the end of each year, there is the option to purchase coverage for another year. The insurance provider can request medical examinations, underwriting and premium adjustments before they approve another year of coverage. Some insurance companies will guarantee renewability, but may adjust the costs of policy premiums.
Level Term Life Insurance
This form of term life insurance provides guaranteed premiums for the life of the policy. However, the policy is not guaranteed to be renewed at the end of the term. The insurance company can refuse to renew coverage for any reason and may request medical exams or underwriting for renewal purposes. The premiums are also not guaranteed from one term of coverage to another.
Decreasing Term Life Insurance
This type of term life insurance coverage provides less and less coverage over the course of the term. This type of insurance would be best suited for people who desire coverage for the life of a debt that decreases over time. For example, decreasing term life insurance would be ideal for those paying off student loan debt. The loan amount is paid off over time, meaning that the total debt decreases through the years.
Increasing Term Life Insurance
This type of term life insurance coverage provides more coverage over the course of the term. People who are concerned about the effects of inflation on the coverage might want to choose this type of policy. With increasing term life insurance, the amount of coverage provided goes up by a certain percentage over the term of the policy. This percentage is specified when you purchase the policy.
Who Needs Term Life Insurance?
The limited nature of this kind of life insurance is especially helpful to people in the following groups:
• Aggressive Investors – Term life insurance is, generally speaking, much less expensive than other types of life insurance policies because of the temporary nature of the coverage. Investors who want to aggressively invest money may opt for this type of coverage for the cost savings and invest the difference in cost.
• Debt Coverage – People with a large amount of debt, such as a mortgage, may choose to purchase term life insurance to ensure that their debt is covered in case of death. The term covered by the life insurance is usually the same amount of time that it will take to pay off the debt.
• Young Families – People who are just beginning their lives often purchase term life insurance to provide for their families in case of death. These families who are just beginning are often heavily in debt from houses, automobiles and student loans.
How Much Does Term Life Insurance Cost?
Term life insurance has a number of different factors that determine how much the policy will cost. Of course, the amount of insurance coverage required is one of the main determiners for the cost of the policy. There are some other obvious factors that go into determining the cost, including age, smoking status, medical history and health condition including blood pressure, weight, height and cholesterol level. Some of the less obvious determining factors are gender, occupation and hobbies that are enjoyed by the person seeking coverage. These factors help an insurance company determine the risk involved in insuring people, and emphasise the need to compare life insurance quotes.
Advantages of Term Life Insurance
There are some definite advantages when it comes to term life insurance with the biggest being the cost. The cost of term life insurance is generally much less than other types of life insurance because it is only a temporary coverage. Another advantage is that different riders can be added onto the policy for additional coverage including riders such as critical illness rider or accidental death or disability rider. Some insurance companies also offer the option of converting term life insurance policies into a more permanent type of policy, enabling people to use term life insurance as a stepping-stone to a more inclusive insurance policy.
There are a range of “riders” which can be added to a term life insurance policy to add additional coverage. A critical illness rider provides a lump sum payment if the insured person is diagnosed with a critical illness. An accidental death or disability rider provides an additional payment in the event of an accident or severe disability. This additional payment is usually the same amount as the complete payout amount. An accelerated death rider provides a portion of the payout if the insured is diagnosed with a terminal illness. This amount can be used to help pay for medical care or other costs that may be incurred. The remainder of the amount is then paid out at death.
It is important to receive a number of different quotes before making a final purchasing decision. We can help make getting term life insurance quotes fast and easy. Our online form is open 24 hours a day, 7 days a week and only takes a few minutes to fill out. Once our form is filled out, one of our qualified term life insurance quotes providers will contact you to discuss the options and provide the best policies with the best prices.