Term life insurance, as the name suggests, is a life insurance policy that covers a set number of years and would pay the lump sum death benefit to the beneficiary if the insured person died during the term of the policy.
Term Life Insurance is Pure Insurance Protection
It has no cash value, making it quite affordable compared to whole life insurance and a good choice to protect your family financially in case of premature death.
Term life insurance provides coverage for a specific term of time such as 10 years, 15 years, 20 years, or 30 years. Whether you purchase a term of 10 years, 15 years, 20 years, or 30 years depends on your long term as well as short term debts. To ensure that financial misery isn't added to the loss of a loved one, you can get an idea of the amount of coverage you need, by answering these questions:
How much money your spouse will need for living expenses?
How much money your children will need until they are financially independent?
When you purchase term life insurance, your spouse can use the death benefit to pay for the typical big expenses that many people have, like a mortgage, transportation, tuition and student loans, healthcare, and credit card debt. The death benefit can also help with basic living expenses like utilities, food, and personal care.
Needs may change based on life events such as marriage, divorce, a new baby, and kids leaving for college. You should periodically review your life insurance needs to protect your loved ones. When you have young children, and have other liabilities such as a mortgage, you should buy a higher coverage term life insurance plan; however, as you get older and your children grow they will start becoming financially independent of you, and you may not need as much life insurance.
When you submit your application for life insurance, please be honest and provide accurate answers to the best of your knowledge. If the insurance company later discovers that you lied on the application, your coverage may be cancelled or your death benefit may not be payable when your family needs it the most. The quotes you receive may be the best estimation based on the information you provide, but the final premiums will be determined once the application is processed in underwriting. You don't necessarily have to send payment of the premium with the initial application, so if the final premium is not acceptable to you, you can always decline to buy the policy.
As part of underwriting, some products may require a medical examination, while others may not. If it is required, the insurance company will be glad to schedule an exam at no cost to you, and at a place, day and time convenient to you. Typically, medical examinations are performed by a nurse or paramedic, and covers your height, weight, medical history, and blood and urine testing. By doing the blood and urine tests, the insurance company looks for specific medical problems.
Once you buy a term life insurance policy, such as a 20 year life insurance policy for $500,000 death benefit, you are guaranteed the same premiums for the next 20 years, irrespective of changes to health and increased age. As long as you pay premiums on time, the insurance company is required to insure you for the next 20 years. If your life insurance needs change before the term ends, you are at liberty to discontinue your insurance at any time. Many companies may also be willing to insure you beyond the initial guaranteed term, but the premiums could be so high that it is impractical to continue beyond the initial term. However, as it is still guaranteed coverage beyond the initial term, you may want to continue your insurance if your health has changed dramatically. In that case, if you try to buy a new policy, the premium may be too high or you may be uninsurable. On the other hand, if you are still in good health, you may be better off buying a new policy.
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