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.
About the author:
For more than 40 years Donald has been known for his extensive
knowledge of the life insurance business. He has represented
some of the largest and best life insurance companies in the
United States as well as Canada. His advice is invaluable.
Donald's website is: http://www.lifeinsurancehub.net
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