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Is term life insurance policy the right choice?

Wednesday, March 13th, 2013

Most people don’t go and buy a life insurance policy just like that; they look for options. Well, this is the right way to go about because, the 1st step in buying an insurance policy is to decide on the sort of policy that suits both your coverage needs and also easy on your wallet.

In general, insurance policies are broadly divided into 2 groups; whole life policies and term life policies. Though both these policies cover life and pay up the sum assured in case of death or permanent disability, they have different terms and conditions. So, it is important to understand the advantages and disadvantages of both these covers before deciding. This write-up deals with overview of the term policy.

Term-exactly as the word means, it is a policy that is offered for a fixed term of period; 5, 10, 15, 20 and 30 years. It is basically the policy seekers decision to decide the term which best suits them. The policy ends after the term ends. And there is no coverage after this period, unless and until the person chooses to renew the policy. However, the premium amount one pays after renewal will increase based on the current scenario and risk factor. This policy pays up the sum assured to the nominee or the beneficiary only in case of the death or permanent disability of the insured. Precisely, in case no death or disability occurs, there is no pay up, whatsoever.

One of the main reasons why the term life insurance policy is sort after than the whole life insurance policy is because of the lower level of premiums. As no amount is invested to give returns the entire premium paid by the insured goes towards the coverage fund. Permanent life insurance policy for the same sum assured has a premium, which is more than double the time that of the term life insurance policy because, the insurance company is liable to pay the sum assured and the returns (cash value) to the beneficiary or the insured at the end of the policy. One more factor on which the premium depends upon is the duration of the policy. In case the term is less; say for example 10 years, the premium amount paid is comparatively less for the same person for a policy of term 20 years. One of the disadvantages that people consider before taking up term insurance policies is that lack of cash value hence, a liability. However, this cannot be considered as a liability because, the premium paid a very low and a lot of premium amount is paid as against permanent life insurance policy. Moreover, this is an insurance policy and not an investment option in the true sense.


September 19th, 2014

Look for more options than simplicity of term life insurance

We all need life insurance and the one that we usually choose is term life. All pools and studies say that this is the number one life insurance sold in USA. The reasons behind this are – its simplicity (it provides basic coverage) and its price (cheapest form of life insurance). This may be news to some, but there are other insurance products that can offer more and are also adjustable and flexible to suit all our needs and changes throughout the life. Whole, universal and variable policies can provide more than just basics.

November 11th, 2013

Washington Firm to Offer Multiple Channels for Funding Long-Term Care

In a major change from the traditional approach, a major Washington firm is asking its carrier and captive agencies to increase payment options for their long-term care clients. This is not only for regular long-term care but is also set to encompass reverse mortgages, life insurance plans, annuities, riders related to long-term care, and critical illness cover. Even life settlements and pre-payment contract for services related to home care are to come under this client friendly payment option.

July 24th, 2013

Life Term Insurance – The Knight in Shining Armor

Henry A. Maslow presented the concept of the kinds of needs a person has. The needs included the basic needs (food, shelter, air), security needs (the need for insurance), and other needs like need for self esteem and self actualization. The reason why these needs are mentioned here is to show the importance of the security needs.

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