Term Life Insurance. What exactly is it?

Advertisements proclaiming lowest rates and protection of your family’s well-being can get confusing. It can be difficult to determine where term life insurance would suit your personal insurance portfolio. The importance lies in knowing exactly what you’re buying before getting concerned about which rates are most competitive or their history.

Like all life insurance policies, term life insurance also provides a lump sum to the designated beneficiary in case of death before the end of the policy. Term life insurance allows flexibility for spending less on coverage at different stages of life, when the need for insurance coverage could be higher. In such situations, term life insurance may make the most cost-effective and sensible choice.

Young Couples With Large Debt…
Young adults at the start of their careers, newlyweds buying a new home, couple planning children, are all in stages of life when money is scarce and life insurance becomes necessary.

Take the example of Jack and Joni, both 29, recently married and planning for children in the next few years. A house had just been purchased on a 30-year mortgage. Even if both work, a new home and imminent children can make the search for a life insurance policy to fit their budget very tough. Following research on various life insurance plans available Mike opted for a term life insurance policy. This would protect Joni from mortgage debt or education expenses for the child in case he should die before the end of the insurance policy term.

Mike was able to take an important factor into consideration of buying a life insurance policy with a large benefit for a more affordable price than with any other type of life insurance.

Individuals With Short-Term Needs!!
There are a lot more than young couples who want to consider term life insurance. These include those with short-term coverage needs lasting to about ten years or less. A child leaving home for college and a start-up business requiring key person coverage are short term needs. Here the term life insurance coverage may offer more financial Spectrum Groups than other existing life insurance plans.

Couples approaching retirement also stand to benefit from term life insurance. Brad and Michel are married, in good health, both in late 40s, with two children aged 16 and 17. Mortgage is to be paid off soon and both plan retirement before turning 60. Here, a term life insurance policy would cover their mortgage as well as the children’s college education in case of one parent’s death before the policy ending.

Cancellation…
In case of cancellation, the coverage ends with no cash payback. This is when circumstances may call for whole life insurance. For example, if Mike were to cancel his policy later in life, his coverage could be converted to a whole life insurance policy. By then both spouses would be earning more and require coverage to help with estate planning needs. Unlike term life insurance, whole life policies develop cash values, insuring the person for his entire life. Term life insurance plans often include a conversion option at the end of the policy eliminating the need for a medical examination.

To ensure of a conversion option in your policy, check the conversion privileges of the term life insurance policy.