Let home remain their home by making sure your family can still pay off large expenses, like a mortgage.
WHAT YOU NEED TO KNOW ABOUT TERM INSURANCE
Financial protection against house mortgage is vital to risk management. Hence, it would be best to get a solid insurance plan because it eliminates further damage. In this article, we are considering important details about one of human life's protection – Term Life Insurance.
What is Term Insurance?
It is a death benefit that pays your beneficiaries for a specific period. The period may expire, and you can extend the insurance policy over another period. Alternatively, it can be allowed to lapse or converted to a full coverage policy.
When is Term Insurance the Best Option?
It is considered the cheapest way of buying life insurance. Hence, the insured’s age and life expectancy are critically considered by insurance companies. For instance, term insurance is a good option if the policyholder has a health challenge or a terminal diagnosis. In most cases, the policy is instigated by a medical test.
Another common reason for getting term insurance is for the financial protection of a young family. When raising a family, there are expenses like sending kids to college, mortgage, etc. These expenses can become a serious challenge when you are not around. Hence, you can purchase term life insurance for 1, 5, 10, 15, 20, 25, or 30 years.
Types of Term Insurance
Below are the four types of term insurance policies.
Annual or Yearly Renewable Term (YRT) Insurance: As the name implies, it is renewed every year. The premium (amount paid to the insurer) increases every year. After a year, the policy is not considered elapsed. Hence, the insurance coverage is guaranteed without having to reapply.
Level Term Insurance: It is a consistent policy that pays the same benefit throughout the insurance term. It means the payment rate will remain the same whether you die in the first or last year of the package. Hence, it is also called the Level-Premium policy.
Decreasing Term Insurance: The premium on this type of policy is also consistent throughout the period of the package. Conversely, the death benefit decreases yearly.
Return of Premium Term Insurance: The premium on this type of policy is refunded once the policy expires. Hence, it is the most expensive type of insurance.
Term insurance serves parents looking for financial protection for their children and loved ones. Likewise, older adults seeking convenience for their spouse can use this plan.
Since it is not as expensive as whole life insurance, your needs will determine if you should go for it.