Term Life Insurance Q&A
- Why should I choose BeyondQuotes?
- Which companies do we represent?
- Is BeyondQuotes licensed where I live?
- Is my information confidential?
- Do you only offer rate quotes?
- How do we choose which companies to represent?
- How much Term Life Insurance do I need?
- What are "level" policies?
- What should be the term length?
- Is it worth insuring my spouse on my policy?
- Can you explain the difference between Term and Whole Life plans?
- I suffer form a pre-existing condition. Can I still be insured?
Applying for a Policy
- How do I apply for Term Life Insurance?
- How do I find the best value plan for my needs?
- What is the waiting period between applying and coverage?
How do we Explain Term Life Insurance?
Some people who have purchased insurance or have searched for quotes online may have missed the crucial discussion over permanent versus term insurance. A wrongly picked plan can do considerable damage, more than any other investment instrument available today. The most crucial decision you should make while purchasing coverage is deciding between permanent, term or a combination of both, but how do we explain term life insurance?
Here we try to explain term life insurance and the benefits associated with it. We also take a look at some of the pitfalls of enrolling in this plan. It will help you in arriving at a better decision.
A term life insurance is the purest form of coverage in that it carries just the death benefit. Consider this as a way to accumulate money for your loved ones when you are gone. This money can be used to pay for the funeral and burial expenses and also to pay your mortgage when you die.
It also helps to meet out the daily expenditure which your family needs to carry on with their life. It is a way to make sure that your family is able to maintain the same standard of living as it was when you were alive and earning. Your children can still continue with their school education and they won’t have to change to a low grade school due to lack of funds. Last but not the least your family will be able to afford the same care.
As we explain term life insurance it is worth to mention here that it is an inexpensive investment and majority of the people, who are earning a decent income, will be able to afford it. People, who have large estate, can have a relaxed time, as estate taxes will not deplete their assets upon their death.
Few people give preference to permanent or whole life insurance but the fact is term insurance costs much less, many people may not be able to afford the cost of permanent coverage. Term insurance coverage is for a specified period of time, usually, it starts with one year, and then in increments of five, that is for five, ten, fifteen, twenty, twenty-five and thirty years.
Some insurers provide coverage up to the age of 65, 80, 85, 90 or 95 years. The premiums for term coverage are usually level, however, in some policies there is a feature of variable premium, which is determined by the inflation rate in the market. These plans whose premium increases every year are known as yearly renewable term insurance policies.
As we explain term life insurance, it is worth mentioning here that death benefits of term policies usually remain the same throughout the term of the plan, except for in decreasing term plans. The decreasing term polices are usually purchased by people who have mortgage to pay, and the death benefit reduces with time as does the amount owed by the person.
Some plans have the option to renew the policy after the expiry of the term. Some insurers may ask for fresh medical assessment to renew the policy while others may not. The renewed policy will, however, be given at new premium which is more than the previous one, in majority of the cases.
Term polices can be converted to permanent plans, the insured person, however, has to opt for this feature at the time of enrollment. This feature should be used well before the expiry of the term. The insurance company reserves the right when a policy can be converted. The policy can be converted either to variable universal life, whole life, and variable life.
Explain term Life Insurance Disadvantages
Just like any other insurance product that are certain drawback associated with term insurance and it is worth mentioning them as we explain term life insurance. The drawbacks mentioned here is from a general analysis. And what is a drawback to one person may act as benefit for the other person.
One of the biggest disadvantages of this plan is that the person who purchases it never gets to enjoy it. The benefits of term coverage are given only when the insured person dies. The purchaser pay premium regularly to keep the policy current which ensure that his or her family is protected. The premium is quite insignificant and, it never bothers anyone. A person who survives the term of the policy gets nothing from the policy.
On the other hand, people who enroll in a whole life or permanent policy are insured forever, and in case they decide to terminate the policy after 20 years they will get a sufficient portion of the money they paid along with some dividends.