What is Term Life Insurance?

What is Term Life Insurance?

You must have heard about different kind of insurance options available such as whole life insurance, term life insurance and universal life insurance. Lets discuss – Term life insurance is life insurance which provides coverage at a fixed rate of payments for a limited period of time for example Term- 10, Term-20, Term 30, Term 40 are insurance policies with level or same premiums for 10 years, 20 years, 30 years and 40 years respectively. After that period expires coverage at the previous rate of premiums is no longer available and you must either forgo coverage or potentially obtain further coverage with increased premium payments. If the insured dies during the term, the death benefit will be paid to the beneficiary. Term insurance is the least expensive way to purchase a substantial death benefit on a coverage amount per premium dollar basis over a specific period of time.

In simple words term life insurance policy pays a monetary benefit to the named beneficiary if the death of the insured happens during the term of the policy. Term life insurance is the most inexpensive way to insure or cover yourself and protect your family or loved ones against financial hardships in the event of untimely passing away.

Benefits of term life insurance?

There are few benefits and the top most is low cost – In comparison to other form of insurance such as Whole life or Universal life, Term life insurance policy is the most inexpensive way to insure yourself.

Second benefit – ability to buy higher amount of insurance, since the coverage is not that expensive, it is really suitable to young families – who have responsibilities on their shoulders towards spouse, kids, house and other dependants, untimely death and can really shake things up in life, there are many examples and families end up in sorry and helpless state, just imagine if something happens to the main bread earner of the family what will family have to go through. So having this form of inexpensive insurance really makes sense and once dependants on you and more independent of you, you can always reduce the  coverage to suit to your new needs.

Third Benefit – to cover short term business loans, If you have business loan for short time frame few years and just need a coverage to cover the loan amount in the event of death, term life insurance policy is best.
Term insurance is often the most inexpensive way to purchase a substantial death benefit on a coverage amount per premium dollar basis. However when the policy comes up for renewal premiums jump considerable upto 3 or 4 or even 5 times the original premium.