How to Select the Right Kind of Term Life Insurance Policy

A term life insurance policy can be described as an insurance product that gives the insurer coverage for a specific or limited duration of time. It is one of the most affordable forms of insurance policies available.

This form of insurance is usually purchased for a period of ten to thirty years. The insured has to pay premiums at a rate which remains the same for the entire duration. The coverage will cease upon expiration of the term and this is one the reasons why the rate is lower in this form of insurance. The insured will not receive any money at the end of the term. The proceeds can be transferred to the next of kin in the event of the insurers death if the policy is still valid.

Once the term expires the investor is invariably left with a couple of choices. The first is to let go of the policy. They can also go in for a renewal that would require higher levels of premium payments.

There are several benefits to a term life insurance policy. It is one of the most easily affordable insurance policies available on the market. The investor gets to choose the kind of services he or she would like from the policy. This helps to reduce costs substantially in the long run. This makes it a very good option if you are low on funds and have to live every month on a strict budget.

Choosing your term life insurance policy

There are several factors that you need to consider when considering a term life insurance policy. Here is a look at some of them:

Analyze your life history and the services that you require from the policy. Factor in aspects like age, occupation, salary, budgetary requirements, long-term planning, family history and your overall health to find an appropriate package. Decide if this package is meant for a short or long-term basis. Plan for the long term, post retirement when you need a sizeable source of support in the form of medical care and other possible expenses.

Decide at which stage of life you would be going in for a more comprehensive form of coverage. If your term life insurance policy were to expire when you are aged 50, any other policy would be a lot more expensive at this stage than when you were 35. Take in to account the rate of inflation that would be prevalent when the policy is due for expiration. If you have planned for a renewal, set aside resources to cater to that. The maximum period up to which term life insurance can be renewed stands at around 30 to 35 years. You also need to factor that in when you go about selecting the right kind of term life insurance policy.

Make it a point to the compare prices of the policies offered by the various insurance companies. Many companies tend to use different business models when it comes to calculating formulas and determining risk factors. To do that they assess the insurer and take in to account factors like sex, age, occupation, overall health, lifestyle choices, marital status and other data to estimate the possible cost to the company.

Your chosen company

The insurance company you approach should enjoy a good degree of goodwill from the public and governing authorities. To do that look at the financial standing of the company in the market and notice how it performs. The better the company the higher the chances that the investor will get paid when laying a claim. Make sure to approach companies that have garnered at least 3 rating points out the 5 in major ratings services.

Smokers generally have to pay more than non-smokers while acquiring a term life insurance policy. This is because close to five million people are known to die from smoking related diseases on an annual basis. Smokers pay a higher premium than  non-smokers even if they belong to the same age bracket.  The costs for coverage can also significantly scale up if the investor is known to suffer from any form of existing illnesses.

Preexisting conditions can make it tough for patients to acquire many kind of health policies. Term life can be used to help those people who were rejected health cover on these grounds. If your existing condition has been addressed, the company can be contacted to lower the premiums that you would have to pay on an annual basis.

There are different forms of term life insurance policies available in the market. They vary widely in their scope of services, duration of coverage and pricing. Make it a point to study in detail all the policies that fall under this scheme and make an informed decision based on that .

One of the simplest forms of term life insurance is the annual policy. This is one of the most affordable types of insurance but one that expires at the end of the year. This can come in handy if you are looking for a temporary policy that can address your immediate needs and procure a more detailed one after its expiry. This is a worthwhile option if you are low on funds and looking for best possible coverage on offer.

There is also the guaranteed level term life insurance policy that is usually procured for a period of 10, 15, 20 or 30 years. The investor here has to pay a fixed annual premium to keep the coverage alive for the duration. It should be noted that the premium is set higher the longer the duration of the policy.