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Term Life
Insurance. What Is It All About?
by: Donald
Lusan
What
is term life insurance? You have an interest in buying term
life insurance, that is why you are reading this article, and
you want to know how it really works. Right? Well, there are
many types of term life insurance and I am going to give you a
brief explanation as to how each one works.
Decreasing Term Life Insurance
Decreasing term life insurance is very popular with home
owners and mortgage companies. The homeowners want to know
that the mortgage is paid off if they should prematurely die,
and the mortgage company want to be assured that they are
repaid the money loaned to the homeowner. The face amount of
these policies decrease in a uniformed manner each year as the
balance owed on the mortgage decreases, and the premium
remains level. This is very inexpensive life insurance.
Increasing Premium Term Life Insurance
This is
initially the cheapest term life insurance you can buy. The
death benefit remains level for the duration, however, the
premiums increase every year and as a result this may turn out
to be the most expensive term life insurance you can buy. If
you should purchase this policy it would be wise to convert to
a level plan as quickly as possible.
5 Year
Level Term Insurance
The face amount of this policy remains level for the entire
5 year period and so does the premium. Upon death the face
amount is paid either in one lump sum or in the form of an
income. If you have a short term need for life insurance, like
covering a bank loan, then this may be the plan for you.
10 Year
Term Life Insurance
Like the 5 year term life insurance policy, the ten year
term life policy can be used to cover a bank loan, but it can
do considerably more. It can be used for family protection and
a myriad of other needs. The face amount of the policy remains
level for the duration and so does the premium. Some companies
allow you to continue the policy after 10 years with an
increase in premium.
20 Year
Term Life Insurance
The
20 year term life insurance policy is probably the most
popular of term life policies. The death benefit remains level
for the duration and in some cases so does the premium. With
some companies, however, the premiums increase after the first
10 years to reflect the cost of the additional risk to which
the insurance company is exposed as the insured gets older.
All in all, the 20 tear term life insurance policy is fairly
inexpensive and does the job it is intended to do.
Unlike whole life insurance, universal life insurance or
variable life insurance, term life insurance does not have
cash values or earn dividends. There is a fairly new type of
term life insurance policy, however, called a return of
premium policy which returns all your premiums at the end of
the term period, if you do not die. The premiums are so high
it may not be worth your while to buy this type of term
policy.
Read
more: Click Here!
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