Term life insurance is a type of life insurance policy available to anyone. It may be the best option for those not willing to stay on the coverage plan for a lengthy period due to the life expectancy.
Regardless of the limitations surrounding this insurance coverage, it still has numerous benefits for its policyholders, should everything go as planned. Meanwhile, getting your term life insurance plans from reputable companies can be more beneficial because you and your family will enjoy seamless coverage and be able to transition into whole life insurance if need be.
This article will help you to determine if this type of life insurance coverage is for you and your loved ones. Especially if money is one of the troubles you face and you want a way out of financial problems.
What is term life insurance?
Term life insurance is a renewable coverage plan that pays one’s family members the premium benefits for a specific period should the policyholder pass away. It bears its name because it is a temporal life insurance plan. It has a lifespan of at least 10 years.
However, you can request an option of 20 or 30 years from your insurer and after that, you will be expected to renew it or allow it to expire. Though this plan has benefits, it is not ideal for people looking to save while under coverage.
Important things to know about term life insurance policy
Like every other coverage, this one requires the policyholder to pay premiums. Premiums are not just calculated based on the things that go under coverage.
With this plan, your premiums depend on your age, life expectancy, and your health status. Your insurance provider may ask for you to be examined by their doctor before you can buy your policy.
Policyholders do not need to worry about premium increases because premiums remain the same amount until the plan expires.
More so, this life insurance coverage is cheap but does not come with a cash value. Still, it is a better way to own a full life insurance plan if your insurance provider offers the option to customers.
What to expect while buying a term life insurance plan
Your insurance provider will ask you to decide on the duration of your policy. It lasts between 10 to 30 years before it expires which on renewing, you will do that at a higher rate as your current age and health status will be reviewed.
Renewing your policy when it expires only means that you have outlived it. It benefits you and your loved ones when the plan is still in force.
Types of term life insurance
Term life insurance comes in various kinds. Each has its premium amount and coverage policies which also differ according to life insurance companies. Let’s look at its type in case you want to buy it.
- Yearly renewable term life insurance
With this coverage, the premium is renewed each year but gets more costly than the previous year. This is due to the age factor that is an important part of this kind of insurance.
- Level-term life insurance
This is the most popular term life policy that everyone knows. Its premiums stay fixed as long as the policy is in force. The same goes for the beneficiary benefits. However, it only increases when your policy expires and you go for renewal.
- Decreasing term life insurance
Like the level term life insurance, the decreasing term comes with a fixed premium. The downside of this coverage is that the beneficiary benefits decrease each year even as the policy is still in place.
Benefits
Out of the different types of life insurance policies out there, term life insurance has the cheapest premiums. It is suitable for anyone starting out newly in their insurance journey or a young family.
Anyone who often thinks about how their loved ones will survive when they are no more can benefit from this plan. However, you must ensure that you keep renewing your policy because that is the only way it will benefit your loved ones.
Should you pass away when the policy is still in force, the insurance company will pay your beneficiaries the plan’s benefits at face value which is not taxable. Your beneficiaries can use the payout to settle mortgage loans, school fees, etc.
It is also beneficial to anyone looking for a temporary life insurance plan. For example, you are out of a job and need life insurance coverage until you land your next appointment.
Another benefit offered by a term life policy is the option of turning it into whole life insurance. This option may not apply to all insurance companies which is why you must ask questions if that is what you wish for.
Conclusion
In conclusion, your needs and financial goals determine if term life insurance is a better option for you when purchasing life insurance coverage.
If you plan to get your policy renewed, ensure you make it known to your policy provider from the onset so that you won’t be denied the privilege of doing so in the future.
