Term Life Insurance Articles
The Face Amount Of A Term Life Insurance Policy And Two Ways It Can Be Altered
2010-05-18
If interested in buying life insurance, you should consider whether or not you want whole life insurance or a term life insurance. A whole life policy covers you for your entire life. A term life policy differs in that it only covers you for a set amount of time, perhaps a year, five years, or even longer. The latter kind of insurance also only offers death protection, and nothing else. However, for certain individuals at different times in their lives, this kind of insurance works better economically than whole life insurance. It tends to be less expensive than whole life insurance. Should you choose, a term insurance policy can be renewed, or even converted into a longer-term insurance policy.
With any life insurance policy, you need to know what the face amount is. This is the amount of money paid to your beneficiary, or beneficiaries, if you should die. On the policy itself, this might be called the face value. The premium is the amount you, the insured, pay for life insurance. The face amount is going to be the most important aspect of any life insurance policy, even a term life policy. The face value can remain constant for the entire term of your life insurance policy. This is called a level term policy because the face value stays level. However, when dealing with term life insurance, there are two ways to alter the face value.
The first way to alter the face value of your term life insurance policy is to get a decreasing term policy. With such a policy, the face value decreases over the set length of time that the policy covers until it reaches zero on the expiration date. In contrast, the second way to alter the face value of your term life insurance policy is to get an increasing face value. This kind of term policy sees the face value increasing over the length of time that the policy covers. The premium remains the same whether your policy is level, decreasing or increasing.
Most people choose level or decreasing term policies rather than increasing terms. The advantages to such temporary insurance are that, at first, it will come at a low cost. This helps those not able to pay for whole life or other insurance. Additionally, temporary insurance can be used to provide additional protection or supplement already existing insurance policies. The drawbacks are that, with each renewal, the premium will go up since it is based upon age. In fact, mostly, a renewal will not be allowed for someone 70 and older. However, most people only use temporary insurance until they can afford better and longer-lasting insurance.
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If interested in buying life insurance, you should consider whether or not you want whole life insurance or a term life insurance. A whole life policy covers you for your entire life. A term life policy differs in that it only covers you for a set amount of time, perhaps a year, five years, or even longer. The latter kind of insurance also only offers death protection, and nothing else. However, for certain individuals at different times in their lives, this kind of insurance works better economically than whole life insurance. It tends to be less expensive than whole life insurance. Should you choose, a term insurance policy can be renewed, or even converted into a longer-term insurance policy.
With any life insurance policy, you need to know what the face amount is. This is the amount of money paid to your beneficiary, or beneficiaries, if you should die. On the policy itself, this might be called the face value. The premium is the amount you, the insured, pay for life insurance. The face amount is going to be the most important aspect of any life insurance policy, even a term life policy. The face value can remain constant for the entire term of your life insurance policy. This is called a level term policy because the face value stays level. However, when dealing with term life insurance, there are two ways to alter the face value.
The first way to alter the face value of your term life insurance policy is to get a decreasing term policy. With such a policy, the face value decreases over the set length of time that the policy covers until it reaches zero on the expiration date. In contrast, the second way to alter the face value of your term life insurance policy is to get an increasing face value. This kind of term policy sees the face value increasing over the length of time that the policy covers. The premium remains the same whether your policy is level, decreasing or increasing.
Most people choose level or decreasing term policies rather than increasing terms. The advantages to such temporary insurance are that, at first, it will come at a low cost. This helps those not able to pay for whole life or other insurance. Additionally, temporary insurance can be used to provide additional protection or supplement already existing insurance policies. The drawbacks are that, with each renewal, the premium will go up since it is based upon age. In fact, mostly, a renewal will not be allowed for someone 70 and older. However, most people only use temporary insurance until they can afford better and longer-lasting insurance.
