The Basics of Term Life Insurance

The Basics of Term Life Insurance

The Basics of Term Life Insurance

Although risks cannot be completely avoided, their potential effects can be mitigated with insurance. One such kind of insurance is term life insurance. This article aims to provide you with a basic understanding of term life, what it entails, its advantages, etc. Read on to learn more!

What Is Term Life Insurance?

As the name suggests, term life insurance is a form of life insurance that is effective only for a predetermined period. It provides the same kind of coverage as whole life insurance but for a limited time and at a more affordable price.

How Does Term Life Insurance Work?

Term life insurance provides financial coverage for your family and beneficiary in the event of your death. Once you buy a term life insurance policy, you are expected to pay a monthly premium throughout the policy’s duration. Until its expiry date, the premium paid is used as a death benefit in the event of your demise.  In a situation where you outlive your policy, your insurer will not pay out any benefits. However, you can renew your policy or switch to whole life insurance.

Why You Should Consider Term Life Insurance

There has been a steady increase in the number of U.S. citizens with life insurance. People now understand that one way to cater to their family’s needs after their demise is by providing financial protection for them. Since whole life insurance is slightly expensive, term life insurance is the next good option.

Advantages of Term Life

  • Affordable rates

Term life has a more affordable rate than other life insurance policies. This may be because of the short-term coverage it provides or the fact that your insurer will not pay the death benefits if you outlive your policy.

  • Non-taxable

Unlike whole life insurance, where you pay tax on the cash value after investing the benefit, term life insurance has no added value other than to pay the face value of premiums as death benefits.

Some employers purchase term life insurance for their workers as a form of benefit. This kind of insurance is known as group life insurance which provides guaranteed coverage regardless of your health.

All you have to do is accept the plan and fill out the necessary details; you do not need to answer health questions to qualify. However, in addition to group life insurance, some employees may buy supplementary life insurance for more coverage. Buying such additional coverage ensures:

  • Convenience

It is easier to buy additional coverage from work. This is because your employer already has your details and can pass them along to your insurance provider. Your premium is deducted directly from your income when you opt for more coverage.

  • Guaranteed acceptance

Most people with serious health issues get rejected and cannot buy other types of life insurance. However, buying a policy through your company guarantees your acceptance without been asked about your health.

Although it provides coverage only for a fixed period, term life insurance is worth investing in.  Contact Kevin or Marci at Dougherty Insurance to learn how we can help you with customized coverage for your unique insurance needs.

No Comments

Sorry, the comment form is closed at this time.