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What is Term Life Insurance?
Term life insurance is the most straightforward form of coverage. Being one of the simplest forms of life insurance available, and among the most popular life insurance products available, term life insurance is also an affordable life insurance and meets that balance of low cost and high quality. Many of the policies come with additional benefits as well. For instance, riders is available and offers living benefits. What does this do for you? This helps you access the benefits of your policy in the event you are terminally or critically ill with less than 1-2 years left to live. It could make all the difference if you are struggling through the illness. A term life insurance policy covers the policyholder for a specific amount of time, which is known as the term. Without the costs associated with other types of life insurance policies, term gives you the protection you need for that defined period of time. The term lengths vary according to what you choose. Terms typically range from 10 to 30 years and increase in 5-year increments, providing level term life insurance. They normally provide an amount of coverage for much less than permanent types of life insurance.
Does term life insurance sound right for you? We recommend that you try our online term life insurance calculator to see what options for coverage and term length is right for you, before you get a term life insurance quote or buy a term life insurance policy. The lowest coverage might be appropriate, or it might not be. There are several types of term life insurance policies and plans available with different life insurance companies. These include level, renewable and convertible. Do you have more questions? We would be happy to personalize the best term life insurance quote for you and compare life insurance companies. Speak to an agent today about the best life insurance policy that's right for your situation, different options with rates, what your options are, and the best quotes available. It’s completely free, easy, and with no obligation.
How Does Term Life Insurance Work?
Term life insurance providers can offer fixed premiums for the entire term or life insurance on level terms, depending on the type of policy. Even the death benefits can be fixed as well. Term life insurance policies are popular with young families and individuals, and people who want that safeguard for a specific period of time. A good example would be someone who wants to protect an income until retirement or while paying off a home mortgage. If something went wrong, that safety net would be very helpful. Some more examples are how it can help you provide for a family member's loss of income, cover short-term debts and needs, provide additional insurance protection during the child-raising years and help care for your family if needed, and provide longer term protection to help your family pay off a mortgage or to help pay for a college education.
What about the amounts that the beneficiary will receive? As with many term policies, beneficiaries do receive the full face amount. However, term life insurance doesn't accrue cash value like several other types of life insurance. If current 2018 state tax laws stay the same, the benefits paid by on a term life insurance policy are tax free. For instance, let’s say that a policy's face amount is $100,000. Does the beneficiary receive the full amount? Yes, pure and simple.
Level term life insurance (or term level life insurance) is one of the most popular types of term life insurance. It offers life insurance on level terms or a fixed premium payment for the duration of the term. It has a fixed benefit amount as well with the terms range from 10 to 30 years, depending on what your needs are. Having a fixed benefit that pays the face amount also is very appealing because it’s clear-cut, pure insurance as they call it. You generally pay premiums on a monthly or annual basis and your family is protected for the term specified. Premiums are more expensive when insuring someone who is older, because the carrier usually averages the cost of insuring someone who is younger. So keep in mind that a longer term could mean a higher monthly premium and difference with the cost. People can more easily budget the level term life insurance that has a "set it and forget it" fixed payment, and this makes it appealing also.
Option to Convert Term Life Insurance
One valuable strength for this type of policy for some people is the option to convert their term life insurance. Without needing to prove that you are insurable, and without a time consuming medical exam, this option allows people to convert their term life insurance into a permanent life insurance policy. What if you decide your policy would make more sense with a cash value? Or that you simply need more coverage and need to make a change? As time goes on, you would want the ability to convert the policy into one that offers nice flexibility as your needs and financial goals change. There are a couple things you need to keep in mind though. You must watch for a deadline, as the ability to convert does not run for the entire term. There’s a window usually in which you can only convert during that time. Also, when you convert to a permanent life insurance policy, the premium will increase with this convertible option.