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When is the best time to buy a term life insurance?

Friday, April 27th, 2012

Owning a Life Insurance policy is important and this not only insures your life and assures your family of monetary payments after your death it is also a form of investment if done wisely. There are two main types of life insurance, term insurance and whole life insurance. Very simply explained term insurance is when the policy insures life for a certain term or a period. The premiums are paid for the term of the policy and if the policy holder dies within the term then his family receives the sum assured when the policy was taken.

A term life insurance will need to be renewed before the end of the term to continue the insurance benefits. With this kind of life insurance the premiums are lower than that of the whole life insurance mainly because this policy is for a shorter period of time. As the premiums are lower or less expensive it allows policy holders to buy policies that have extra coverage from a younger age. This is a good option as when one is younger one is better equipped financially to take on the premiums of policies that offer greater coverage. Many policies allow their term insurance policies to be easily converted into Permanent life insurance policies with the same paperwork and medical tests that were taken for the term policy.

There are disadvantages to this kind of life insurance. The value of the premiums can increase if the policy has to be renewed or maintained every term in proportion to the increase in your age. Many people find this proposition difficult to maintain and do not continue the policy leaving them without an insurance cover.  There is also no cash benefit at the end of the policy. Many term policies also require a renewal of the medical tests and other eligibility requirements to continue the policies or to keep the premium costs down. This is not practical especially if the term life insurance expires towards your retirement making it difficult for you to afford the extra cost of the premiums for renewals.

But, a low cost short term policy can be beneficial for those looking for a policy for themselves.  Any life insurance policy is important than having no policy at all. For someone starting out in a career or with financial constraints or even those with no dependants can find a term insurance policy beneficial. There are good policy options available online as well and these are easy to buy. Always remember to read through the details carefully, before buying any policy.

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