Simple Term Life Insurance Definitions - And How To Interpret Them
What’s a good term life insurance definition?
There are lots of term life insurance definitions out there, but here’s one of the best from the PCA Foundation:
“Term life insurance is a life insurance policy purchased for a term of years. If the person dies during this term, the beneficiary receives the face amount of the policy. The policy expires at the end of the stated number of years.”
Basically its a form of insurance that lets you select not only how much it covers, but also how long it lasts!
Some policies, such as whole life, generally lasts until you die and does not have renewable terms.
The greatest thing about term is its flexibility! At the end of the term, you can make any changes to (or cancel) the policy if you want.
You can get it for 10 years to protect your mortgage, 20 years to make sure your kids have money through college, or whatever other financial burdens you have in the near future you want to cover.
Also, if you don’t like your provider its easy to switch at the end of the term to a new provider when your current policy ends.
Another term life insurance definition brings up something I want to address- its from Sagicor.com:
“A policy that provides protection for a specific period of time (ex.. 20 years). If you’re alive when the term ends, there is no payout. Usually the least expensive type of life insurance.”
Not only is it more flexible, but its also the least expensive! You can easily save at least 10 percent by using term rather than whole life.
This is not always true, but in the short term (20 years or less) this is always true, and often its better in the long run as well.
At the end of each term your premiums will increase if you renew the policy, which can make it more expensive than if you’d done whole life insurance from the start. But if you only want enough coverage to last you a few years, why bother with whole life?
Here’s just one more definition I want to throw out there from mcgeenet.com:
“Life insurance that is issued for a limited time period as specified in the contract.”
That’s about as simple as it gets. The contract doesn’t say you have to renew at a certain point or anything- when you’re done you’re done. Obviously this is much different from whole life insurance, which basically locks you in for life.
The most common policy today is term, due to its simplicity and the client’s ability to easily change or cancel it at the end of the term. Unless you are fairly young and know that you will want coverage after your children are out of the house and your mortgage is paid off, stick with term.
You still get the fixed premium for the length of the term and it will cost less in the long run.
Justin has worked in the life insurance industry for 13 years. To help those confused about life insurance, he created http://www.toptermlifeinsurance.com. If you have any questions or would like a quote for life insurance, check out his site Here.
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