Term Life Insurance: Description of Term Life Insurance

Have you decided yet how you want to provide for your loved ones after you die? If your family depends on your financial contribution, you need to be sure they can manage without you. Term life insurance is the least expensive way to give you and your family peace of mind.

Term life insurance will cover you for a specific period of time, unlike whole life insurance that will cover you until you die. You can purchase a policy with 1, 5, 10, 15, 20 or 30 years of coverage. Term life insurance can offer you a fixed death benefit at a fixed premium, no matter how long you have been paying premiums. There are different types of policies that can give you different benefits.

A return of premium (ROP) term life insurance policy allows you to get your premiums back if you outlive your policy. This type of policy does have higher premiums and it must be long term, between 10 and 30 years.

An annual renewable term (ART) life insurance policy can be purchased for one year and renewed annually. The premium will be reassessed each year based on your age and health. However, there is a cap on how long you can continue your annual renewal. Depending on what insurance company you buy your policy from, you can no longer renew an ART policy anywhere from 80 and 95 years of age. ART term life insurance is the least expensive form of term life insurance and can afford you coverage while your budget is tight.

An adjustable term life insurance policy allows you to make adjustments whenever you feel it is necessary. If you need to increase your coverage or decrease your premium, you can do so. Just remember that more coverage means a higher premium, and a lower premium means less coverage. Also, on average, insurance companies will only allow you to make changes up to the age of 75.

Term Life Insurance: Description of Term Life Insurance

A universal term life insurance policy is the combination of the benefits of universal insurance and term insurance. As term insurance, it is for a specific period of time and it is renewable. As universal insurance, it has a cash value that earns interest; you can borrow against your premiums; and your premium is variable, allowing you to use the policy as a savings vehicle.

Term life insurance quotes provide affordable financial security for your loved ones after you have passed away.

Term Life Insurance: Rates For Term Life Insurance

Term life insurance is the most affordable way to financially secure your family and other loved ones after you die. To calculate how much term life insurance coverage you need:

  • Balance your current income and expenses, including your mortgage, credit card debt and children’s education.
  • Estimate when these expenses will be fully paid off.
  • Approximate when you can or want to retire and the amount of your pension.
  • Estimate how much money you can save through savings and/or investment vehicles.

A very simple example is this:

  1. If your current income is $100,000 and you plan on working for the next 25 years, you will make $2,500,000.
  2. If you decide you can make ten percent of your income through savings and investments, you can increase that total to $2,750,000.
  3. Subtract the balance of your mortgage and other expenses for a net total.
  4. Add your net total to your estimated pension income.
  5. Averaging inflation and estimating living expenses, will there be enough for your loved ones to live on if you pass away?
Term Life Insurance: Rates For Term Life Insurance

Term life insurance will top up your income and savings. A term life insurance with an annual premium of $350 can give you a $250,000 indemnity.

To find out how much coverage your insurer is willing to give you, there will be a number of questions you will need to answer. Your coverage is based on your life expectancy and how you rate on their mortality table. Your insurance company will conduct a physical exam that will include your height/weight ratio, age, gender, smoking habits, lifestyle, serious illnesses and blood test results to determine your health class qualification.

If you want to stay covered for your lifetime, you will need to keep your insurance at a rate you can afford long term. Term life insurance is very inexpensive for people in good health under the age of 50. However, once you reach 50 years of age, premiums tend to increase rapidly. By the time you reach 65 years of age, you may need to switch to a whole life insurance policy as you may no longer qualify for term life insurance with some insurance companies.

Figuring out how much coverage you need, how much coverage an insurance company will give you, and how much you can afford is actually a simple task and can be answered with a few simple questions.

Term Life Insurance: Who Needs Term Life Insurance?

Are you financially responsible for another person but you do not make much money or have high bills? Term life insurance can be used for your survivors to take care of debts that you and your family have incurred as well as provide them an income. Your death benefits can cover:

  • Medical and funeral expenses.
  • Estate taxes.
  • Child care and college education.
  • Mortgage and credit card debt.
  • Lost income.

If you have your own business, you can protect it and ensure it will continue to provide for your family after you are gone. Your term life insurance indemnity can:

  • Fund a buy/sell agreement to pass the ownership on to another person.
  • Cover any expenses incurred while your company adjusts to the loss of a key executive.

Parents are highly recommended to have life insurance in order to provide for their children in the event of an untimely death. In deciding how long you should carry your term life insurance policy, estimate the number of years it will be before your youngest child graduates from college. That will be the minimum length of your policy.

Term life insurance is very inexpensive and can be an affordable way to cover yourself over the course of your career. If you think you can amass a comfortable nest egg for you and your spouse’s retirement, a cheap term life insurance can be a little extra assurance, just in case you do not reach your goal.

A term life insurance indemnity can also mean a nice lump sum for your surviving family, in addition to a whole life insurance indemnity, pension, savings and investments.

A term life insurance policy can be a supplement to your whole life insurance policy to increase protection when your expenses are high. If you have children in college and you are still paying your mortgage, your family will be left in a serious financial crunch if you were to pass away.

Some money lenders, such as banks, require an additional guarantee that you can pay off a large loan, such as a business loan, vehicle loan, or a mortgage. Investing in an affordable term life insurance policy for the lifetime of your loan can be all the assurance a bank requires.

A term life insurance policy can be the answer to your question: how will I financially provide for my loved ones after I die?

Term Life Insurance Directory

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