subject: Clarifying The Most Common Questions On Term Life Insurance [print this page] When it comes to insurance policies, you know that there are lots of types available in the insurance market nowadays. One of those that you don't know much about is the term life insurance. You hear that it's not that expensive compared to other types of life insurance such as whole life or variable life. If you want to know more about it, here are some of the common questions about term life insurance and the answers to these questions.
What is term life insurance?
This refers to the insurance type in which the coverage is provided at a limited time. The payments are also made at a fixed rate for a limited period only. If the insured dies during that period, the death benefit will go to the beneficiary. If that period expires and the insured doesn't die, he is no longer covered or protected. The client must obtain further coverage with a new or supplemental policy.
What is the advantage of term life insurance?
The main advantage of purchasing this type of insurance is the cost. It is in fact the least expensive among the types of life insurance policies. It's a practical way of purchasing death benefits at a low cost premium.
What is the disadvantage of term life insurance?
The limited coverage is the number one drawback of this policy. When the insured doesn't die during the term paid for, the policy expires. Of course, you'll be thankful you are able to live longer but it also means that you need to get a new coverage.
What is the difference between term life insurance and other life insurance policies?
Apart from the cost and the limited time coverage, another difference is how the premiums are used. In whole life or variable life insurance, a part of the premium is used for investment. For the term life policy, no part of the premium goes to that purpose. It's the premiums that pay for the insurance.
How much does this policy cost?
As mentioned earlier, this policy is affordable. For example, a 30-year-old male who doesn't smoke may be entailed to pay $2,500 a year for a whole life policy. The death benefit amounts to $250,000. But if the same person gets a term policy, it would only cost him $300 a year. See the big difference? Of course, the whole life policy has the advantage of not increasing over time and also features a cash buildup which the policyholder can use or borrow at any time. Age, health condition, and activities like smoking or drinking affect term life insurance rates.
How do I apply for term life insurance?
The process is basically the same as with the other plans. For one, you need to undergo basic physical exam that includes blood work to see if you are insurable. Then you will fill up and submit an application form to the policy provider along with the requirements that will be asked from you.
by: Erica Bailey
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