Term life insurance does not build any kind of cash value, which makes it an original type of life insurance and considered pure insurance protection. Unlike whole life insurance, term life insurance is only temporary and only covers a specific term, or a specific period of time in a person's life. Benefits will go to a beneficiary only if the insured person dies during that specific window of time.
Term life insurance is usually the cheapest way for people to purchase a death benefit package on a per dollar basis. The reason for this is because the term will expire and the insurer will not have to pay out.
It is recommended that people should purchase term life insurance with the Theory of Decreasing responsibility in mind. The Decreasing responsibility theory is provided that the insured person or persons realizes and understands that any and all financial responsibilities are only temporary and that they should purchase insurance to compensate for these responsibilities.
The easiest and simplest way to purchase term life insurance is on an annual basis. The premium to be paid is only the expected probability of the person dying within that period plus a few extra fees, such as a cost and profit component. Because insurers are able to choose whom they decide to ensure, the probability of someone they choose to insure dying within the next year is extremely low, most people opt not to purchase one-year terms. An annual policy is not very cost-effective either. Many people choose to go with annual renewable terms (ART). In ART, a premium is paid for the coverage of one year and then is guaranteed to be continued each for so an X number of years, which could be anywhere from ten to fifteen to twenty years or more, whatever the insured person decides on. Even though this direction will cause the insured to pay a higher premium, they are more likely to have the benefits paid.
A level term is a very popular form of term life insurance that is a renewable annual term with a constant premium for an X number of years. The years in a term are usually 10, 15, 20, and 30 years. A level term charges a higher premium for a longer amount of time simply because as people get older they are more expensive to ensure, and their age is averaged into the equation for the premium.
Even though they are more likely to be paid the benefits in the end, many people are uncomfortable with regular life insurance for one reason or another. For those types of people, term life insurance is an excellent choice. It gives people the option of having life insurance for a certain period and can be renewed annually or in larger periods.
Thursday, September 30, 2010
Term life insurance online quotes & term life insurance explained
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When you first set up a life insurance plan, you can choose between the kind of premium that suits you best. If you are going to only need the insurance for the short term (for example, under 10 years), then a stepped premium (a premium type that starts low, but increases every year with age) can be a good option.
Deciding between the various types of life insurance solely depend on individual needs. Term insurance policy suits well to those wants to spend less and to have access to all the benefits of life insurance. I do like the level term policy than the basic one. I will call my agent to know more about this policy. Thanks for sharing all the information.
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A common rule of thumb is you need six to 10 times annual income. That gives you a ballpark figure, but it's inadequate. The amount you need depends on how old you are and how many working years you're looking to replace. Do you want enough insurance to pay off the mortgage, send kids to college or pay for a daughter's wedding?
And consider that the payout from a term life policy stays the same, but your expenses are likely to rise over time. Some people might want their family to continue living the same lifestyle if a breadwinner died. Think of all that entails, from food and clothing to health insurance and retirement savings.
"It requires a bit more work than using a rule of thumb," said Byron Udell, founder of online life insurance broker
The Internet has many insurance calculators that can help come up with a number. Use several. An insurance broker or agent can help too.
San Blas
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