Do You Understand Term Life?
What Is Term Life Insurance?
I have not run a scientific study, but I would have to assume that term life is the most popular kind of life policy today. I base this assumption on the fact that I see it advertised very frequently, and also because it is usually the most affordable type of life coverage on the market. Compared to other types of life insurance, term is usually a bargain if you just look at the cost of premiums.
What is Term Life?
- It is purchased for a specific time period (term). Some common terms are 10, 20, or 30 years, though other lengths are sold too.
- It is considered pure insurance, because the premiums usually only pay for coverage, and not for any cash value. Insurers have developed some hybrid products, but in general, this is true.
- Once the policy term is over, coverage ends. Some policies have options to extend coverage or convert to permanent policies.
Because coverage is temporary, and because it is pure insurance with no cash or investment features, term rates are usually a lot cheaper than permanent (i.e. whole or universal) insurance premiums. People who only want to purchase coverage, and use other products to save or invest, should consider buying term life.
Some term policies come with extra options (riders) that make the policies more comprehensive, but also a bit more expensive. Some examples are critical illness, disability, and return of premium riders. It is a good idea to decide what you want out of your policy, how much you can afford to pay, and then shop around for the right policy!
Find and Compare Affordable Term Life Insurance Here!
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