subject: Life Insurance – Some Facts That Need Prior Consideration [print this page] Just as the name suggests, Term life Insurance provides coverage for a specific period of time or term that we opt for like 5,10,or 20 years. When the term ends, we have the option of renewing the policy. Instant Term Life Insurance pays a lump sum amount of single benefit at the time of death. It's also called temporary insurance. The term policy pays cash only if death occurs during the term of the policy. If the term ends without the death of the insured person and if it's not renewed, then the policy automatically ceases. Term insurance is very simple and straight. It's very affordable and beneficial for people with young children, those who plan to buy a home, or those with debt to payoff. Term insurance can be renewed when the term ends and also can be converted to whole life or permanent insurance at any point of time. Its very flexible according to the needs of the insurer.
All other term life insurance policies are generally very low priced and are mainly bought to cover financial responsibilities such as dependent care, mortgages and loans, children's education etc. However, because no benefit can be claimed if you outlive the term even by a day, it is imperative that you should decide on the duration term very carefully. Another important point that you need to ponder about is what kind of term life you should buy. These are quite a few of them. Following are few of them:
Annually renewable term life
Level term life valid for 5/10/15/20/25/30 years
Decreasing term life with level premium but decreasing face value
Convertible term life that can be converted into permanent life later on
Permanent (Whole) Life Insurance is a case where there is no specific term or period by which the policy expires. Its life long for the policy holder. Upon the death of the policyholder, the death benefit is paid to the
beneficiaries. And in this type of policy, the cash value accumulates over time and when we cancel the policy after sometime, and then the insurance company is responsible to pay the cash value to the policy holder. It's upon us as to take which type of policy for our loved ones. In the case of whole insurance, the amount of premium to be paid monthly will be a bit more than that of term insurance. So people having a better financial stability can think of opting for whole insurance.
Life Insurance Some Facts That Need Prior Consideration
By: David Livingston
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