Term Life Insurance
The word “Term” in term life insurance means a period of time. Generally, term insurance is sold in 5 year, 10 year, 15 year and 20 year lengths. Once a policy is issued, the life insurance company is obligated to continue that coverage for the length of term you have purchased, as long as you continue to pay the policy premiums.
Once the term is completed, the policy will cease unless a renewal provision is purchased. On the other hand, you are not obligated to continue the policy and may terminate coverage when you feel it is no longer necessary to protect yourself. Term Insurance is the least expensive form of life coverage. Most life insurance companies “band” their premium costs. “Banding” means that the more coverage you purchase the cheaper the premium. For example, a $300,000 term life insurance policy will cost less per $1000 of coverage than a $1000 term life insurance policy.
As in all life insurance policies, age, health, and habits are a large factor in determining the cost of your coverage. Most companies increase the life insurance rates dramatically for people that smoke or have a dangerous occupation or risky hobbies. Why would someone want a policy that expires at a fixed time? Most term life insurance is purchased to protect against a debt or an obligation that has a specific length of time such as a home mortgage, vehicle loan, college education or even to protect the cost of starting your own business.
The idea is to provide immediate cash to pay on a current or future obligation after the insured person has passed away before satisfying that debt. If you would like to know more about Term Insurance or want a quote, please click on the link and complete the information.
by: John Farnham