Term Life Insurance
Term Life Insurance is pretty self explanatory, but for those who don’t know already, Term Life Insurance is a type of life insurance with a limited period of coverage, or a short term Life Insurance. As the policy owner, you’ll have life insurance for however long the term lasts and you have control over whether you would like to extend that term further to get more coverage. Term Life Insurance is easily the least expensive kind of life insurance you can buy, compared to other insurance policies. Unlike other types of insurance that provide a significant death benefit along with other ways to save and get more money in returns, Term Life Insurance policies don’t include this. It’s also referred to as “pure life insurance” because any premiums paid are to cover the cost of the insurance and insure policyholders in the event that they lose their life.
Who Should Buy Term Life Insurance?
If you’re looking into getting Term Life Insurance, it might be a smart decision for you. While it’s smart to get insured at any age, popular times to get insured are young ones. Young people with uninsured, dangerous jobs, race cars, are often sick, and frequently fly out of country are great examples of young people that should get term life insurance. These examples of younger people are great candidates for term life insurance as they are typically more reckless than older people and they are in high-risk situations. They can easily pay a small amount (around the price of a meal) a month and receive a large sum of money in the event that their lives do end. Another popular scenario that should consider getting term life insurance is those who have recently had kids. Even though it’s typically unlikely that they’ll pass during the next 20 years in their life, the possibilities are endless and having the death benefit paid to you to protect your family can do a large amount of good for a single parent and peace of mind.
It’s possible to purchase term life insurance at any age, but the older and potentially more unhealthy you become, the higher your monthly premium increases. Deciding sooner rather than later to purchase term life insurance can save you a large amount of money in the long run.
What Are The Different Types of Term Life Insurance?
There are five general types of term life insurance that you can pay on, each offering different benefits and payouts for the policyholder.
● Guaranteed Level Term Life Insurance: Being the most common type of life insurance, it’s characteristics include yearly premiums that rise each year depending on how much risk you put on the insurance company. A large drawback of this kind of term life insurance is that you aren’t guaranteed a renew on the policy at the end of the term.
● Annual Renewable Term Life Insurance: An ART is essentially just like a Guaranteed Level Term Life Insurance policy in the way that the premiums rise every year (more so after 20 to 30 years of holding the policy), but the difference is that it is renewable every year for a defined period of time.
● Return of Premium Term Life Insurance: This kind of term life insurance returns the amount in premiums paid, assuming that the insured person is still alive. This policy is usually available in 15, 20, or 30 year terms. While it’s often pricier than most term life policies, it has some of the same advantages of whole life insurance policies.
● Decreasing Term Life Insurance: The death benefit of the policy decreases over time and is perfect for those with mortgages and other large debts.
● Modified Term Life Insurance: This kind of term life policy is basically the opposite of the Decreasing Term Life policy in the way that over time, you pay more in premiums than in the beginning. The disadvantages of this lie in the event that your future financial plans don’t turn out the way you think they will in the moment.
What Are My Options At The End of My Term Period?
When you’ve reached the end of your term life insurance policy, you have the options to extend, convert, or renew your policy. If you decide to extend your policy, you can, but your premium will increase every year as you age. This can be a great option for older people that still need life insurance, but can’t qualify for a new policy. If you choose to convert your policy to a new one, the advantages are great because you aren’t required to reconfirm your insurability, but the disadvantages can vary from higher premiums to not getting the best policy. Renewing your policy can also help your budget, as it’s typically the cheapest way to go, but you also have to prove you’re insurable again.
Term Life insurance policies can be a great asset for people that need life insurance, but don’t want to pay high premiums. Make sure to check what policies are available to you to get the best insurance for your needs.
