If you are looking for low cost life insurance, term life insurance may be for you. Term life insurance was the first life insurance to hit the market. This type of insurance has fixed rate payments. Also the term of the insurance policy is renewable. Let’s review some of the finer points of term life insurance.
Term life insurance is the simplest form. Term life insurance is a pure death policy. The policy will usually cover funeral expenses, debts, college education for dependents and dependent care. The easiest policy is a one year term. At the end of the term, the customer may be required to show proof of insurability. This can be difficult if the customer becomes ill during their original contract. If the customer becomes terminally ill during the original contract, they may be uninsurable when the policy is renewed. There are policies that do not require proof of insurability. These are the most ideal term life insurance policies. When purchasing term life insurance, choose a plan that offers an annual renewable term. This policy is guaranteed for a longer period of time. The period of time ranges from 10 to 30 years. Premiums will ago up as age increases.
Level premium term life insurance is the most common term insurance. With this policy, premiums are guaranteed for an extended length of time. The most common time periods are 10, 15, 20 and 30 years. Level term insurance plans are renewable. However, renewing the policy can be denied. If there is evidence of insurability the extension may be denied. Term life insurance have an upgrade option. The customer can upgrade to a whole life policy or universal life policy.
Before purchasing a term life insurance policy, make sure you know the pros and cons. Affordability is the biggest pro. The affordability allows buyers to purchase a larger policy. Whole life insurance can cost up to 4 times more than term insurance. Term life insurance is relatively easy to buy. Make sure to shop around for the best rates. The biggest con, is that the policy will expire. You will be starting from scratch when renewing a term life insurance policy.