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What is Term Life Insurance?
Written by: Timothy Gorman
There are two different types of life insurance, term life insurance
and permanent life insurance. Term life insurance is the easier of
the two plans. This plan supplies you with death protection for a
pre-determined amount of time, anywhere from one to 30 years. If you
happen to die while paying on this type of policy your beneficiary
will be paid the amount of money you specified when purchasing the
policy. If at the end of the term you are still living your death
protection coverage will cease unless of course you renew the
policy. You can purchase this policy on a minimum budget and it is
particularly perfect for providing coverage while your children are
still in the home or while paying off a mortgage or other large
loans.
This plan is merely a “quick fix.” It is similar to leasing a
vehicle. You pay a lower cost for the privilege of driving the car
knowing you will return it after a short period of time. However,
just like when leasing a vehicle there is an option to buy. If you
are purchasing term life insurance because you need protection now
but can’t afford the higher payments of permanent protection in most
cases you can switch your plan over to permanent protection when
your situation changes (be sure to verify this before purchasing any
policy). You can also look at term life insurance as an efficient
means of protecting your family while using your remaining finances
for savings or other investments.
Although this type of coverage is less expensive than permanent life
insurance your premiums will increase at renewal periods as you grow
older. Normally at renewal periods you will also be required to
obtain a physical in order to qualify for the lowest rates.
There are four different types of term life insurance policies one
of which is renewable term insurance. This policy will delete your
need to submit to a physical when renewing your policy. The company
agrees to renew your policy even if your health has declined
however, be prepared to pay higher premiums with each renewal when
purchasing this plan.
Convertible term insurance will allow you to switch from term to
permanent life insurance without succumbing to a health exam first.
Of course this convenience will more often than not come with the
expense of higher premiums. On the bright side once you convert to
permanent your premiums will not increase as with the renewal of the
term plan.
Level term insurance presents a permanent premium for a
pre-determined number of years, usually 10 or 20, and the death
benefit remains the same. With this policy you will lock in a
particular price for the duration of the policy. The down side to
this plan is that the rate will rise significantly if you decide to
renew with subsequent level policies.
The remaining plan is the decreasing term insurance policy.
Throughout the term of this policy the death benefit will decrease.
You may start out with $250,000 worth of coverage however for the
first 10 years each year your benefit will be reduced by $10,000.
The premiums on this policy will also vary over the term of the
policy, it is for these reasons that this policy is not highly
recommended nor sold very often.
About the Author
Timothy Gorman
is a successful Webmaster and publisher of
Best-Free-Insurance-Quotes.com. He provides more insurance
information and offers free money saving auto, home, health
and life insurance quotes that you can research in your
pajamas on his website.
Visit Tim's
website at
http://www.best-free-insurance-quotes.com. |
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