Term Life insurance is one of the most straightforward life insurance policies in the market. As the name suggest this insurance policy provides cover for your loved ones for a predetermined duration hence the phrase “term”. Term insurance is specific to the specified period that is, if you die within the term you win (so to speak). In the event that you outlive the term your family will not get any benefits from the insurance. There are some few basic considerations that one should always look into while opting for Term Life Insurance.
Term insurance is simplistic as you can easily choose to opt for the 10 or 20 year policy. Some policies have the option of prolonging the term even beyond the age of 70 years. Premiums can be fixed amounts over a fixed for a number of years or you can opt for an annually renewable term. Annually renewable term allows you to increase premiums paid on an annual basis. With term insurance policies you are availed with existing payment schedule and annual maximum rate. For term insurance, the company reserves the right to increase premiums if insurance risks increase.
Your state of health is an important factor of consideration while considering premiums. At certain ages the insurer may require proof of good health before you can be insured and maintain the lower premiums associated with term life insurance.
Term insurance provides short term financial security for your family. For example if you have a daughter who is due for college in 7 years and requires $100,000 to ensure completion of her college education. To safeguard her education you can decide to take term insurance for 10 years that has $100,000 benefits in the event of death. If you pass on during this term you can rest assured that your daughter will have college education even after your demise.
Term life insurance offers a lot in terms of lower and flexible premiums, clear cut policies and upgrade permanent life insurance without proof of good health. Ultimately term insurance is a short term financial security measure. Choosing a policy may not be easy but can be simplified by outlining you insurance needs in terms of time and their use. If they are short term, term life insurance would be your best choice if not you can opt for permanent or a combination of term and permanent policy.
