Term Life Insurance Explained

Term Life Insurance Explained
by Lorna Goldsborough


To protect your loved ones, life insurance is something that you need to look into. Term life insurance is one type of life insurance that you can investigate. There are several advantages and factors that might make this particular type of life insurance appropriate for you.

Essentially, term life insurance provides coverage for a certain amount of time; for instance, they can be bought for spans of one, five or ten years. After the span that the insurance has been purchased for expires, and if the subject of the policy has not died, there is usually a possibly for renewal of the policy, but there is no cash surrender value. As with other forms of life insurance, if you perish before the end of the policy, your beneficiary will receive the promised funds.

Term life insurance is considered to be pure insurance protection because there is no accumulation of cash value. Once the term ends, there is no payment. Because of this, a term life insurance policy cannot be considered as collateral security for loans. One advantage of this is that, combined with the fact that term life insurance policies are so inexpensive, that money can be put into other funds that all typically outperform life insurance in terms of profitability. Term life insurance, when coupled with things like CDs and mutual funds, can be an excellent plan for families, which have both a need for insurance and for investments that pay off quickly.

Term life insurance is the cheapest form of life insurance available, and thus ideal for families need coverage to protect against the financial distress of the death of a family member. Whole life insurance, for instance, costs thousands dollars a year, while term life insurance is seldom goes over three figures per year. The affordability is definitely one of the advantages of term life insurance, allowing needed funds to be diverted elsewhere.

A term life insurance policy is ideal for responsible family planning. For instance, parents can purchase policies that will expire when their children are adults, ensuring that the child will be taken care if should something happen to their mother or father. Thinking further ahead, a policy could be purchased to make sure the child will be able to finish college in the event of a parent's demise. This type of insurance policy can also be used as security against a mortgage. The term for the policy can match the mortgage, for instance, primarily as a protection against the death of someone who contributes to the mortgage's payment.

Term life insurance is one of many options for individuals seeking coverage. While there are policies that are more inclusive and have cash returns, there are still many advantages to term life insurance polices that make them ideal for a wide variety of people.


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