Term life insurance is a type of insurance where the insured pays a regular premium for a stated duration. It can be as short as 1 year or as long as 30 years. The insured pays premiums to the insurer that in turn pays an amount called a premium on the agreed terms. The term can be for one year or the agreed term can stretch out indefinitely.
As a general rule, term life insurance is purchased by those who expect to be alive for less than one year. This category includes baby boomers and people entering their retirement age. Typically, term assurance will not cover individuals who have a terminal illness, but instead allows them to convert the policy to a "whole of life" insurance policy. Basically, this means that the insurance is renewable upon the insured passing away. One thing to note about convertible policies is that they typically carry a higher premium than ordinary policies. In addition, converting from a "conversion" policy to a "permanent" policy typically costs more money than simply purchasing a "conversion" policy.
There are several important facts about term life insurance policy, which make it an attractive option to many consumers. For example, term life insurance policies pay more than others when the insured has died. This fact is important because it allows the family to utilize the savings from the death benefit to cover estate taxes and other bills without making a substantial loss in cash. Another pro is that the premium payments are generally affordable, making them accessible to most consumers. The cons, however, are somewhat negative, especially when the insured proves too ill to continue paying.
Usually term insurance is purchased to replace a term life insurance policy that expires after the insured has passed. However, there are some policies which are renewable such as renewable term premium policies. These policies pay the same premium each term, but do not require an additional premium payment when the insured passes away. As with the other types, these policies generally do not build cash value. This means that the policy holder must depend on the premium payments to support expenses after his death.
There are also several pros and cons of this type of life insurance. For example, term life insurance allows coverage of burial expenses and leaves no dependents. This policy can help alleviate some grief in the family when they need to adjust to the death of a loved one but there are some cons. Term coverage can be rather expensive, which limits its use to those with lower incomes. Also, since term life insurance does not accumulate cash value, the death benefit is reduced upon the death of the policy holder.
As a general rule, term life insurance is purchased by those who expect to be alive for less than one year. This category includes baby boomers and people entering their retirement age. Typically, term assurance will not cover individuals who have a terminal illness, but instead allows them to convert the policy to a "whole of life" insurance policy. Basically, this means that the insurance is renewable upon the insured passing away. One thing to note about convertible policies is that they typically carry a higher premium than ordinary policies. In addition, converting from a "conversion" policy to a "permanent" policy typically costs more money than simply purchasing a "conversion" policy.
There are several important facts about term life insurance policy, which make it an attractive option to many consumers. For example, term life insurance policies pay more than others when the insured has died. This fact is important because it allows the family to utilize the savings from the death benefit to cover estate taxes and other bills without making a substantial loss in cash. Another pro is that the premium payments are generally affordable, making them accessible to most consumers. The cons, however, are somewhat negative, especially when the insured proves too ill to continue paying.
Usually term insurance is purchased to replace a term life insurance policy that expires after the insured has passed. However, there are some policies which are renewable such as renewable term premium policies. These policies pay the same premium each term, but do not require an additional premium payment when the insured passes away. As with the other types, these policies generally do not build cash value. This means that the policy holder must depend on the premium payments to support expenses after his death.
There are also several pros and cons of this type of life insurance. For example, term life insurance allows coverage of burial expenses and leaves no dependents. This policy can help alleviate some grief in the family when they need to adjust to the death of a loved one but there are some cons. Term coverage can be rather expensive, which limits its use to those with lower incomes. Also, since term life insurance does not accumulate cash value, the death benefit is reduced upon the death of the policy holder.
