As the name suggests, term
life insurance is life insurance you buy for a certain term of time. As these
policies don't have any cash value component, the premium amounts you pay is
used only for keeping the policy active.
These premium amounts have to
be paid only for the term of the policy, and when the term or policy
terminates, you stop paying premiums as your coverage expires. Thus, term life
is one of the cheaper life insurance plans available.
Term insurance is however
divided into level term where your premium and death benefit remains constant
for the entire length of the term, no matter if it's 10, 20 or 30 years long.
Usually, term insurance
policies are acquired for specific terms spanning from one to 20 years. Moreover,
at the end of the term, you don't receive any return on all the money you had
paid towards the policy.
When Your Policy Terminates
However in case you die before
the term terminates, your loved ones receive the policy's full amount. Term
insurance rates remain locked for the same amount, and are much cheaper than
whole life policy rates.
As premiums of a term life
policy is about 10% of that of a whole life insurance policy, they are often a
better choice. On the contrary, whole life insurance policies offer protection
plus investment opportunities.
When term policies mature,
they expire without any investment. This is nothing to worry about as it's
always better to pay for protection, and use the remaining money for wise
investments.
Moreover, once the policy
expires, you don't actually need insurance anymore as you have sufficient
savings to depend on. Most people get this insurance coverage so that they can
reduce debts as they get coverage till they retire, wherein most of their debt
is paid off.
Decreasing Term Policy
In these policies, the death
benefit of the policy reduces every year, while its premium amount remains the
same. In fact, when the policy terminates, the death benefit usually reaches
zero.
Annual Renewable Term
In case of these policies, the
death benefit remains constant for the term of the policy while the policy is
renewed annually wherein the premium amount increases every year. While
premiums are at first lower than premiums for a level term plan, with time,
they become rather expensive.
Term Life Insurance
Disadvantages
Term life insurance policies
have no cash value element as the premium amount you pay goes to the policy
coverage and does not earn or accumulate interest. Sometimes, having insurance
only for a specific term can be a drawback.
Supposing you have a 20 year
policy, and after these 20 years you decide you want to extend your coverage,
you will have to undergo insurability testing again and you could be denied any
additional protection. If you do get additional protection, then your policy
will be renewed at a higher premium.
Advantages
These insurance policies are
cheaper than whole, universal and variable life insurance policies.
Accordingly, you can buy only as much coverage as you require. Term life
insurance policies only provide specific coverage periods of 10,15,20,25 and 30
years.
So if you are worried about
getting life insurance while you have dependants to look after at home, or
mortgages to pay, you will now be able to decide how much of coverage you
require, and for how long.
You can get low cost term life
insurance [http://www.termlifeinsurancequotes.uk.com] in the UK today.
We compare 95% of the UK
market to find you the lowest rate without compromising on your policy benefits
or features. Why waste your time completing multiple forms on multiple websites
when you can complete one short form in a couple of minutes here -
www.termlifeinsurancequotes.uk.com [http://www.termlifeinsurancequotes.uk.com].
This article comes with
reprint rights. Feel free to reprint and distribute as you like. All that we
ask is that you do not make any changes, that this resource text is include,
and that the link above is intact.
0 comments:
Post a Comment