Term Life Insurance Articles
The Benefits Of A Term Life Insurance Policy
2009-11-12
Personal financial planning can be daunting. If you've done this, you know that insurance is an important part of that process. Life insurance protects loved ones from devastation by covering large financial obligations left after the insured's death. Term life insurance allows many to afford coverage they thought unattainable. Compared to whole or universal insurance, which has investment components and residual value built into the policies, term is considerably less expensive - it is often considered the "purest" form of life insurance. These policies are comparable to an auto policy: payout occurs if something happens during the policy, but, once it ends, there is no residual value.
However, there are many benefits to term life insurance. The policyholder is free to choose the length of the term, often between five to 30 years. The premiums usually are level for the life of the policy. Since the premiums are less expensive than whole life, the insured can purchase higher coverage and still spend less. Additionally, riders or attachments can customize the policy. For example, a rider can be added for a child. Another example is a "waiver of premium" rider, which insures that the coverage will continue during short interruptions in premium payments.
Term life insurance coverage also allows the insured to obtain a policy during specific times in life. Young working people with few assets are able to afford insurance in the early part of their careers. A person also may choose term insurance while personally investing the difference vs. whole life premiums to build their own investment portfolio. Many do not want investment dollars tied up in conservative insurance packages. Additionally, term life insurance coverage is helpful when the insured faces a period of high expenses - such as adding multiple dependents when starting a family, educating dependents or paying off a mortgage. Term policies can cover a spouse until retirement years begin or supplement a smaller whole life policy. In any of these examples, once the expensive or vulnerable time of life has passed, the policy ends.
Term insurance does become more expensive as one gets older since the likelihood of a policy payout increases with age. However, there are several different term products available to address this. One example is a "return of premium" term insurance that, although 25 to 50 percent more expensive, returns the insured's premiums at the end of the policy. Another option is a convertible policy that allows a buyer to start a term policy when younger and converts it to a whole life policy later.
Whatever the strategy, term insurance is a viable way to obtain insurance coverage. Each buyer should research the options, consult with different companies and arrive at the best solution for their needs.
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Personal financial planning can be daunting. If you've done this, you know that insurance is an important part of that process. Life insurance protects loved ones from devastation by covering large financial obligations left after the insured's death. Term life insurance allows many to afford coverage they thought unattainable. Compared to whole or universal insurance, which has investment components and residual value built into the policies, term is considerably less expensive - it is often considered the "purest" form of life insurance. These policies are comparable to an auto policy: payout occurs if something happens during the policy, but, once it ends, there is no residual value.
However, there are many benefits to term life insurance. The policyholder is free to choose the length of the term, often between five to 30 years. The premiums usually are level for the life of the policy. Since the premiums are less expensive than whole life, the insured can purchase higher coverage and still spend less. Additionally, riders or attachments can customize the policy. For example, a rider can be added for a child. Another example is a "waiver of premium" rider, which insures that the coverage will continue during short interruptions in premium payments.
Term life insurance coverage also allows the insured to obtain a policy during specific times in life. Young working people with few assets are able to afford insurance in the early part of their careers. A person also may choose term insurance while personally investing the difference vs. whole life premiums to build their own investment portfolio. Many do not want investment dollars tied up in conservative insurance packages. Additionally, term life insurance coverage is helpful when the insured faces a period of high expenses - such as adding multiple dependents when starting a family, educating dependents or paying off a mortgage. Term policies can cover a spouse until retirement years begin or supplement a smaller whole life policy. In any of these examples, once the expensive or vulnerable time of life has passed, the policy ends.
Term insurance does become more expensive as one gets older since the likelihood of a policy payout increases with age. However, there are several different term products available to address this. One example is a "return of premium" term insurance that, although 25 to 50 percent more expensive, returns the insured's premiums at the end of the policy. Another option is a convertible policy that allows a buyer to start a term policy when younger and converts it to a whole life policy later.
Whatever the strategy, term insurance is a viable way to obtain insurance coverage. Each buyer should research the options, consult with different companies and arrive at the best solution for their needs.
