Term Life Insurance

If you are considering getting a life insurance, you’re probably thinking, “What do I get?” It is even more confusing once your agent starts to blether about whole life insurance or term life insurance. What’s the difference? Which one is better? What suits you? What is term life insurance?

Understanding Term Life Insurance

You’re probably wondering what term life insurance is. How much would it cost you? How are you going to get a life insurance without burying yourself unnecessarily with unreasonable premiums? Basically, when people speak of term life insurance, they generally refer to the type of insurance that basically covers a specific period. This period could range from a year to ten years or longer. Term life insurance is a pure insurance. You will not get additional investment options from this type of insurance.

If you would like to get a term life insurance, you have to consider that there are actually different kinds of life insurance. So, what are these different types? Term life insurance generally varies and the variations include:

  • Decreasing term life insurance which decreases the policy’s coverage on a yearly basis.

  • Increasing term life insurance which is quite similar to the basic term life insurance. However, this type of insurance operates in an opposite fashion to the decreasing life insurance. In this type of insurance, the coverage increases yearly. However, as the coverage increases, premiums paid for this also increase. This type of term life insurance is ideal if you are going to take out a long life insurance.

  • Increasable term life insurance which offers the insured the option of increasing his coverage on specific intervals or events. So, you could increase your coverage in the event of marriage. Of course, if you increase you coverage, your premiums will also increase correspondingly.

  • Renewable life insurance which offers the insured the chance to extend the term of the contract upon its expiration. Your premium, however, stays the same.

    • Benefits of a Term Life Insurance

    There are many advantages to getting a term life insurance. Term insurance is preferable to whole life insurance if you are younger than 50. This is great if you have a pretty steep budget. You’d have the benefits of life insurance if you opt for term rather than whole when you have a small budget.

    Of course, there are also disadvantages to term life insurance. If you are older than 50, the cost of a term insurance is bigger. In fact, it is better not to opt for this type of insurance if you’re over 50. With a term insurance, you run the risk of losing your policy at the term expiration of your insurance. So, it is advisable that you take out a policy that allows for renewal or conversion to whole life insurance. Another disadvantage of a term life insurance policy is that you do not accumulate cash value. So, you basically enjoy the benefits of the insurance as long as it is active but you do not own any part of it as your own property. This is different from whole life insurance where you can actually take out a loan on the policy’s cash value. So, if you’re going to take out a term loan, make sure that you do your homework and compare quotes to get the best policy available to you.




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