What is Term Life Insurance?
by Efin Advisor | August 5, 2007
When you’re looking for a straight answer to an honest question these days, you could visit Wikipedia, the online encyclopedia created by millions of users across the Internet, or, if the subject is “life insurance,” you could check out EFinancial’s own Insurance E-Learning Center a virtual personal insurance library for helpful, life insurance information.
Take a basic question like ‘What is Term Life Insurance?” Wikipedia starts out: “Term life insurance is the original form of life insurance and is considered to be pure insurance protection. And continues, “Term insurance is often the most inexpensive way to purchase a substantial death benefit on a coverage amount per premium dollar basis.”
Why buy Term Life Insurance? Term life insurance is appropriate for you, if you are:
• in need of coverage for a limited period of time,
• a young person who is looking for lower premiums,
• buying a home or car, where the financial burden of a loan will disappear in time.
Term life insurance policies must be renewed when each term ends. Before buying a term life insurance policy, you should ask about the renewal provisions for the protection of your future insurability. There are some typical choices:
• Annual Renewable — he premium go up each year.
• Level Term — the premium stays the same for specific period like 5, 10, 15, or 20 years, then increases sharply.
• Automatic Renewable — you’ll have to pay more for this feature.
Some other options when shopping for term life insurance policies may include:
• Re-Entry – it requires a lower premium than an automatically renewable policy. You can renew at the same low rate offers to new customer; but you’ll have to pass a physical examination. If you’ve developed any health problems, your premium could go up and cost more than an
automatic-renewable policy.
• Convertible term – you’ll have the option to convert to a whole life insurance policy in later years.
And that, in a nutshell, is a textbook description of “Term Life Insurance.”
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