What is Term Life Insurance Coverage?

Saturday, 18 June 2011

There are many kinds of life insurance available and term life insurance is one of the most frequently purchased this is the case for several reasons. For one, it is usually the cheapest and despite the low monthly cost can have very high face amounts. It is preferred by many who want it to ensure that their loved ones will manage financially after their death. Term life insurance also has several plan models available and that allows the individual a great deal of freedom as well as flexibility. A term life insurance policy can be taken for just one year, or even as long as ten or twenty years. The two most commonly owned plan lengths, though, are the seven and ten year plans. Even though some will choose to get a term life insurance plan that is paid annually and can be renewed after the end of each year, it is better to go with a longer term. This is because the premium increases by a certain percentage each year, whereas with a longer term plan the price is guaranteed to not change over the term of the life insurance plan.

However, term life insurance should not be seen as an investment. Even though the premium paid for other plan types of life insurance, such as whole life or variable life, goes in part towards building a cash value that may one day be paid out, term life insurance is different. With a term life insurance policy, all the money paid each month goes towards insurance coverage and nothing else.

Although the benefit of term life insurance only the death benefit, this shouldn't be viewed as a negative. Term life insurance is generally the most inexpensive of all life insurances to purchase and that means that the monthly installment is very affordable. As a general rule, the premiums for a term life policy are just a fraction of what it would be for a whole life policy even if the coverage amount is the same.

The younger a person is when they purchase a term life policy, the more inexpensive the premium will be. Life insurance companies use other factors such as gender to determine how much a policy will be for a certain amount of benefits. This includes how healthy an individual is at the time the insurance plan is started, whether or not the person smokes and if they are obese.

Before a company will issue coverage, the person applying for a term life insurance plan will often have to provide the results of a recent physical exam. For this reason healthier individuals will get better rates. Life insurance, however is much easier to qualify for than health insurance or disability insurance. This means that a person who is needs regular medical treatment, smokes or who takes prescription drugs should not think that they won't get approved for a life insurance policy. Most people qualify for a life insurance plans. 

One great way to find out what plans are available to you is probably to request rates on the Internet. You may be surprised by how little a term life insurance plan can cost.


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