Term Life Insurance Explained

Term life insurance is an inexpensive form of insurance that most people will find affordable as long as they have an income. Term life insurance offers a death benefit depending on the number of years the client has coverage for.

A term insurance policy can ensure and guarantee that the beneficiaries will receive payout upon the death of the life insured. This is especially important if the life insured is the sole bread winner in the family.

The payout can be used to cover for funeral expenses, mortgage payments, car loans, school fees, etc, everything that is needed to keep a family going even when the sole breadwinner has passed on.

Another advantage of a term life insurance is the flexibility in deciding the number of years the client wants to be insured for. Upon acceptance, the annual premiums are usually level or fixed based on the client’s age of entry at the point of policy inception.

This means that premiums will not increase even as the client ages within the period of the policy. Meanwhile there are also other variations of term policies such as renewable term, increasing term and decreasing term. These are variations that are designed to suit the client’s needs and affordability at different stages in life.

Another advantage is that term policies often have the privilege of being converted into whole life policies within a specific period of time depending on the client’s need.

Term life policies are the best value for money should a client wants to leave a huge amount of money for their family when they pass on.

The life insurance coverage can amount to anywhere from hundreds of thousands to millions of dollars. This is an extremely affordable risk management tool for many who face financial constraints in insurance payments.

Riders can also be attached to the main term life policy covering early critical illnesses or late stage critical illnesses. The only downside is that the premiums paid are flat and thus will not be accumulated into any savings or refunds. It offers the client the highest leverage in maximizing coverage without any surrender value.

For example, Mr. John Lee, the sole breadwinner in his family, wants to leave a large sum of money to his family should he pass on. He is financially strained due to his low income in a low paying job. With a wife and 2 children who are still young, it is advisable for Mr. Lee to cover himself with an affordable term life insurance policy should any misfortune befall on him.

The payout depending on his insurance coverage should be calculated to an age where his children are old enough to support themselves financially after his passing on. As it is a level premium policy, it is advisable for Mr. Lee to have the policy incepted early as premium is a lot cheaper while he is still young.