Term Life Insurance Articles
Benefits Of A Long Term Life Insurance Policy On Premiums
2011-01-07
Term is the simplest form of life insurance coverage sold and term life policies, which represent 'pure protection', are also the least expensive to buy. There are, however, several options available that will alter the amount of term life premiums required to obtain coverage, which will be discussed here. All of these options have to do with specific conditions of renewal.
The word 'term' in the phrase 'term life policies' refers to the length of time a policy is in force. The most basic term is one year, although a term can be ten years or even thirty years. The face value of a term policy is the amount of money that will be paid to the beneficiary in the event of the insured's death during the term. Unlike whole life or permanent insurance, term life polices accrue zero cash value, thus their definition as 'pure protection'.
One major advantage to buying term life insurance is the initial affordability of term life premiums, particularly when the insured is at a relatively young age. For a young father wishing to ensure that, in the event of his early and untimely demise his mortgage will be paid off and his children will have the funds needed to attend college, term life insurance is an ideal option. A young person in good health is able to acquire a fairly large amount of protection for a relatively small cost. Costs, however, will continue to escalate each and every time the policy is renewed at the end of a term. This could occur annually, if the term opted for is one year, or it could happen every 10 or 20 years. It's determined by the term of the policy.
The main benefit of buying a long-term life insurance policy is that the premiums the company charges for the protection will remain the same throughout the entire term. While the early year premiums on, for example, a 20-year term policy would be initially higher than for the same dollar coverage on one year term coverage, a person carrying a one year policy will see a premium increase next year at renewal time. The 20 year policy won't see a premium increase for 20 years.
Most life insurance companies require prospective policyholders to prove their insurability at the time of application. This proof could include supplying medical records, undergoing a medical physical or submitting to certain tests such as blood tests or urine tests. Most term life policies offer an option called guaranteed renewability, whereby a policy whose term has expired can be renewed without providing current proof of insurability. This option is well worth considering as an add-on.
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Term is the simplest form of life insurance coverage sold and term life policies, which represent 'pure protection', are also the least expensive to buy. There are, however, several options available that will alter the amount of term life premiums required to obtain coverage, which will be discussed here. All of these options have to do with specific conditions of renewal.
The word 'term' in the phrase 'term life policies' refers to the length of time a policy is in force. The most basic term is one year, although a term can be ten years or even thirty years. The face value of a term policy is the amount of money that will be paid to the beneficiary in the event of the insured's death during the term. Unlike whole life or permanent insurance, term life polices accrue zero cash value, thus their definition as 'pure protection'.
One major advantage to buying term life insurance is the initial affordability of term life premiums, particularly when the insured is at a relatively young age. For a young father wishing to ensure that, in the event of his early and untimely demise his mortgage will be paid off and his children will have the funds needed to attend college, term life insurance is an ideal option. A young person in good health is able to acquire a fairly large amount of protection for a relatively small cost. Costs, however, will continue to escalate each and every time the policy is renewed at the end of a term. This could occur annually, if the term opted for is one year, or it could happen every 10 or 20 years. It's determined by the term of the policy.
The main benefit of buying a long-term life insurance policy is that the premiums the company charges for the protection will remain the same throughout the entire term. While the early year premiums on, for example, a 20-year term policy would be initially higher than for the same dollar coverage on one year term coverage, a person carrying a one year policy will see a premium increase next year at renewal time. The 20 year policy won't see a premium increase for 20 years.
Most life insurance companies require prospective policyholders to prove their insurability at the time of application. This proof could include supplying medical records, undergoing a medical physical or submitting to certain tests such as blood tests or urine tests. Most term life policies offer an option called guaranteed renewability, whereby a policy whose term has expired can be renewed without providing current proof of insurability. This option is well worth considering as an add-on.
