Of all the various options, term life insurance is the least expensive and most commonly purchased type of protection. This type of insurance policy is purely insurance purchased against the death of the insured for a specific period of time, usually a specified number of years. At the end of this 'term' your policy coverage ends unless you decide to renew it.
Term life insurance is the absolute best way to provide the protection that insurance affords for everyone who is on a tight budget.
Here's a quick look at the different types of term policies available today.
Annual Renewable Term
This life policy is the most popular form of life insurance sold today. It is a low cost, affordable life insurance policy that really appeals to younger people. The cost for a typical $100,000 policy is usually just a few dollars per month. The death benefit remains level for the duration of the policy term and it is used mostly to pay off debts in the event of your death.
Decreasing Term Life
A decreasing term life policy works very well for protecting a mortgage on your house. Just as the name says, this policy decreases the death benefit each year it remains in force. Most people would like their house payment to be paid upon their death, removing this financial burden from the surviving spouse. This type of coverage is ideal.
5-Year and 10-Year Term Life
5 and 10 year term life policies provide coverage for a set number of years only. Premiums for these types of policies are generally inexpensive and they are non-renewable. The theory behind these types of policies is that at a predicted time in the future, the insured will have paid off the mortgage and built up a retirement savings plan, and term life will no longer be necessary.
15-Year to 30-Year Term Life
These term life policies allow you to pick the length of time that you need coverage for and pay a set level premium for that period of time. They work great for families with young children living at home. For example: you have a 6 year old son and you want to be sure that your spouse and child are taken care in the event you pass away. Your family will need to have cash on hand to meet the regular expenses of day to day life, as well as future educational expenses. A 25 year term policy would fill this need perfectly, providing for the above described needs in the unfortunate event that you pass away during this time.
Term life policies are the least expensive insurance policies available because your are purchasing insurance only. With other types of insurance, such as whole life insurance, you are also purchasing an investment component. Many whole life policies call these investments "retirement savings," but there are other methods to save for retirement without having to choose a policy that may not be the best for you.
However, term life is not the most practical policy choice for you if you are seeking coverage for the entire duration of your life and/or seeking an investment component. Term life policies do not accumulate guaranteed cash values, nor do they assist with estate planning the way whole life insurance can.
If you simply want to protect the financial future of your loved ones for the least cost in the event of your death, term life is your best choice.
Author Resource:-
Greg Roy is a business owner, writer, and father. Find out more about the benefits of life insurance at http://life.insurance-deal-s.com.
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