Term
Life Insurance - At A Glance!
Helping you define term life insurance, with a brief explanation of the advantages and disadvantages
What
is the basic function of this type of life insurance?
It provides coverage for a period of one or more years, and is
designed to provide a specific benefit (face amount) for a stated
amount of time.
Is
term life the best type of policy for my needs?
The majority of policy holders are individuals with limited income
and high short-term needs, entrepreneurs covering a business loan,
or for those seeking personal family protection.
How
"cheap" is term life?
Generally, it provides the most protection for the lowest premium
dollar spent.
Should
I consider "level" term?
Possibly! Premiums do start out slightly higher, but they remain
the same for several years. If you're looking for a low cost product
that will pay off your mortgage upon death, consider "level"
over "decreasing."
What is the difference
between renewable and convertible?
At the option of the policyholder, renewable term life insurance
allows you to renew a policy at the end of each period without
evidence of insurability. Generally, the premium increases at
each renewal in correlation with the age of the insured.
If the contract has a convertible feature, you will have an
opportunity to exchange or convert your policy for permanent
coverage without evidence of insurability.
It is to your advantage,
to make certain that your policy is renewable and convertible.
Does this form of
coverage provide a means for cash accumulation?
Typically, term life does not build cash value. Therefore, should
the policy be surrendered, the policyholder will not receive any
cash.
When are benefits
paid out?
A death benefit is only paid, if the policyholder dies while the
policy is in force.
Are
early benefits available should I become terminally ill?
There are some policies that provide early benefits, if the policyholder
becomes terminally ill.
What
is the best method of payment?
The annual payment option is always best. Remember that you are
charged for the convenience of monthly, quarterly or semi-annual
payments.
How
much life insurance do I need?
While each person's needs are unique, there are a couple of simple
guidelines.
Personal family protection? You will need a high enough face amount,
so if you should die, the proceeds will be ample to take care
of your family.
Covering a key man (or women) in business? Based on how much
the business would suffer financially from the loss of a key
employee, you should be able to simply calculate the amount
of money that would be needed to compensate for such a loss.
What do I need to
remember when shopping for life insurance?
Depending on your needs versus your budget, you may want to buy
term life first. After all, you can usually convert to permanent
insurance, but you generally cannot convert a permanent policy
to a term contract.
Compare costs and benefits,
but make certain the companies you consider are financially stable!
An agent / broker can assist you in making this determination.
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