Term life insurance is the simplest and least expensive kind of life
policy. It is often referred to as pure life policy protection because it has
no cash value. The core purpose of term life insurance is to provide the
insured's beneficiaries with financial security in an affordable manner. This
means that this sort of policy has only one main function and that is to pay a
specific lump sum to a beneficiary upon a specific event, such as your death.
The premiums for term life insurance are inexpensive in comparison to other
kinds of insurance policies. With this type of insurance, the cover exists for
a predetermined term and will then result in a lump sum being paid when the
insured dies. If, however, the insured is still living when the term terminates,
then no payment will be made to the beneficiaries. When organizing for your
family's financial independence, it is important to keep in mind that term life
has no cash value and so you need to ensure that this kind of insurance is the
correct life policy for you.
There are several methods used to measure your need for life insurance and
the most agreed upon rule of thumb is that you should be insured for about 10
times your annual salary. So for example, if you make $50,000 a year, then a
policy in the amount of $500,000 would be sufficient for your requirements. You
will also need to review what your economic contribution is to your family as
well as all future expenditures and financial commitments such as mortgage
payments, future educational expenses, funeral expenses and more and then
deduct this amount from your total assets in order to determine the amount of
life insurance needed.
Term life insurance is a logical option if you have dependents or a
mortgage as it will help repay the mortgage after your death and will ensure
that your loved ones will not face financial difficulties. You can select your
term life insurance in a way that it will match the repayment terms of the
mortgage, and this should help clear the mortgage if you die before the mortgage
repayment has been completed.
There are various sorts of life cover and it is important to select the
right type that suites your needs. Some kinds of term life cover include;
Renewable Term which includes a renewal provision that gives the policy owner
the right to renew the insurance coverage at the end of the specified term
without showing evidence of insurability. Since the cost of the policy and
premiums may rise as you get older, you may want to avoid the annually
renewable term life policy in favor of something like a guaranteed level term
life policy where the policy remains the identical price for a specific period
of time that may range from 5 to 30 years depending on what you have chosen.
Return of Premium (ROP) life cover is the newest sort of term life
protection and it pays out the value to you at the end of the term if you are
still alive. If you die during the term then the funds go to your beneficiary.
Another favorite kind of term life insurance that is much sought after is the
one that does not require taking a medical exam. For those that wish to have
term life insurance without medical exam, you will need to shop around until
you find a trustworthy company that has such provisions.
Taking out a life insurance policy gives you peace of mind that your loved
ones are taken care of when you can no longer be there to support them
financially. To get the best from your term life insurance, it is necessary to
comparison shop and to ensure that you fully understand the terms of your policy
and that it meets your financial and personal needs.
Lyn Denton is a writer for MoneyAdvice Pro [http://www.moneyadvicepro.com]
which offers information on all money matters including Life Insurance
[http://www.moneyadvicepro.com/life-insurance], mortgages, loans, saving money
and more.
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