Term life insurance is the original form of life insurance and is considered to be pure insurance protection because it builds no cash value. This is in contrast to permanent life insurance such as whole life, universal life, and variable universal life.
Term life insurance is temporary, as it covers only a specific period of time, the relevant term. If the insured dies during the term, the death benefit will be paid to the beneficiary. Because the term expires the insurer often does not have to pay out making term insurance the most inexpensive way to purchase a substantial death benefit on a coverage per premium dollar basis.
A life insurance policy which provides a stated benefit upon the holder's death, provided that the death occurs within a certain specified time period. However, the policy does not provide any returns beyond the stated benefit, unlike an insurance policy which allows investors to share in returns from the insurance company's investment portfolio.
Insurance for a specific "term" or period of time. If the insured dies during the term the benefit is paid. If the insured doesn't die during the term the coverage expires.
Most of what you've read is fairly accurate. However, term policies generally do not expire at the end of their term. there are two basic types of term insurance: Yearly Renewable Term and Level Term.
YRT starts out with very low premiums, lower than corresponding level term policies. With each passing year the YRT premium goes up. The amount of the increase each year is larger than the previous year. As you can imagine, these policies become extremely expensive as several years go by.
Level Term's premiums are guaranteed to remain level for a set number of years, typically 10, 20 or 30 years. After the level period runs out, the policy does not expire, but the heretofore level premiums leap upwards similar to the YRT, with each subsequent year's increase being larger than the previous one. Instead of a steadily increasing climb like the YRT, the Level Term policy premiums in the first year after the level term period ends take a huge step up, sometimes by a factor of 10 or more.
Term insurance is very useful to cover an individual's need that is for a very finite period of time, say to cover a new mortgage or to add protection while a newbord child is being raised to adulthood.
Permanent insurance (whole life, universal life and variable universal life) also have potential importance to an individual's insurance portfolio.
Be very skeptical of:
Anyone who tells you to "always buy term".
Anyone who tells you to "never buy term".
Anyone who uses a multiple of salary approach to determine your need for coverage
Anyone who works directly for an insurance company (Career agent).
this was a really quality post. In theory I’d like to write like this too - taking time and real effort to make a good article… but what can I say… I procrastinate a lot and never seem to get something done.
I admire the valuable information you offer in your articles. I will bookmark your blog and have my children check up here often. I am quite sure they will learn lots of new stuff here than anybody else!
May 31st, 2008 at 7:21 am
Term life insurance is the original form of life insurance and is considered to be pure insurance protection because it builds no cash value. This is in contrast to permanent life insurance such as whole life, universal life, and variable universal life.
Term life insurance is temporary, as it covers only a specific period of time, the relevant term. If the insured dies during the term, the death benefit will be paid to the beneficiary. Because the term expires the insurer often does not have to pay out making term insurance the most inexpensive way to purchase a substantial death benefit on a coverage per premium dollar basis.
May 31st, 2008 at 7:21 am
A life insurance policy which provides a stated benefit upon the holder's death, provided that the death occurs within a certain specified time period. However, the policy does not provide any returns beyond the stated benefit, unlike an insurance policy which allows investors to share in returns from the insurance company's investment portfolio.
May 31st, 2008 at 7:21 am
Insurance for a specific "term" or period of time. If the insured dies during the term the benefit is paid. If the insured doesn't die during the term the coverage expires.
May 31st, 2008 at 7:21 am
Most of what you've read is fairly accurate. However, term policies generally do not expire at the end of their term. there are two basic types of term insurance: Yearly Renewable Term and Level Term.
YRT starts out with very low premiums, lower than corresponding level term policies. With each passing year the YRT premium goes up. The amount of the increase each year is larger than the previous year. As you can imagine, these policies become extremely expensive as several years go by.
Level Term's premiums are guaranteed to remain level for a set number of years, typically 10, 20 or 30 years. After the level period runs out, the policy does not expire, but the heretofore level premiums leap upwards similar to the YRT, with each subsequent year's increase being larger than the previous one. Instead of a steadily increasing climb like the YRT, the Level Term policy premiums in the first year after the level term period ends take a huge step up, sometimes by a factor of 10 or more.
Term insurance is very useful to cover an individual's need that is for a very finite period of time, say to cover a new mortgage or to add protection while a newbord child is being raised to adulthood.
Permanent insurance (whole life, universal life and variable universal life) also have potential importance to an individual's insurance portfolio.
Be very skeptical of:
Anyone who tells you to "always buy term".
Anyone who tells you to "never buy term".
Anyone who uses a multiple of salary approach to determine your need for coverage
Anyone who works directly for an insurance company (Career agent).
April 2nd, 2010 at 11:19 pm
this was a really quality post. In theory I’d like to write like this too - taking time and real effort to make a good article… but what can I say… I procrastinate a lot and never seem to get something done.
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April 3rd, 2010 at 9:16 am
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April 12th, 2010 at 5:58 am
I admire the valuable information you offer in your articles. I will bookmark your blog and have my children check up here often. I am quite sure they will learn lots of new stuff here than anybody else!
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