Term Life Insurance can be a valuable part of any long-term, financially-sound plan for your future. Understand how it works or get term life quotes.
First and foremost, term life insurance is a life insurance product designed to provide protection for unexpected loss for a set period of time in exchange for fixed premium payments. The “terms” vary, but most insurance companies offer plans in 5, 10, 20 and 30 year terms. Rates are based on your state, and they can also vary.
There are different plan designs as well that can impact the rates and how the plans work. Some of these include return of premium options and renewability provisions among others.
Fortunately, you can get term life quotes online without much effort on your part. Since the plans are essentially the same, it’s usually a matter of comparing rates and financial stability of the companies. You can get a term comparison online on our site here:
Advantages of Term Life Insurance
Term life has many advantages when compared to other forms of life insurance, such as permanent or variable life insurance contracts. Term life allows you to purchase the largest face amount (i.e. the most death protection) for the smallest premium amount, since the time period is limited.
This means that term life rates are lower than premium rates for other types of life insurance. And, as a result, it is affordable for a larger percentage of people.
Other advantages of term life include the ability to cover a debt that expires at a certain time. For example, many people may purchase a term life plan to cover them in the case of an unexpected death to the primary wage-earner before a home is paid for in full. For example, if you have 20 years left on your mortgage and still owe $150,000, you may consider a 20-year term policy to cover that remaining amount.
Term life is less expensive than other forms of life insurance. The actual premium amounts depend on several variables, including two which the consumer selects during the shopping/applying process:
Term Life Terms to Know
There are a handful of terms in term life insurance that are exclusive to life insurance. These are important to know if you are going to be shopping for term life. These are the basics:
- Face Amount – The face amount is the death benefit. If the insured dies during the term, this is the amount paid to the beneficiary.
- Policy Owner – The policyowner owns the policy and is not necessarily the beneficiary or insured.
- Beneficiary – The beneficiary is the person or persons who will receive the death benefit if the insured dies during the term.
- Insured – The insured is the person whose life is insured under the life insurance contract.
- Premium – The premium is the amount that the policyowner must pay, on a monthly, quarterly or annual basis, to maintain the insurance coverage on the insured.
- Term – The term is the length of time for which the death benefit is provided.
Why to Buy Term Life
There are many options when it comes to term life insurance. And, there are even more options for where to invest your money. The real reason to purchase term life insurance, as opposed to some of these other options, is the protection of your family and/or assets against unexpected loss. The ability to do this at a relatively inexpensive cost (when done at an early/mid age) provides a value of financial security for your family that is not available in many other investment vehicles.
For more information, you can always view the Life Insurance Buyer’s Guide, which is published by the National Association of Insurance Commissioners.