Life insurance might not seem valuable, but as time passes, you will understand how valuable it is. Purchasing term life insurance gives you peace of mind, and it is one of the best gifts you can give to your loved ones.
Nobody knows what will happen tomorrow; that is why you need term life insurance. It is an easy and less expensive way to provide money for your family when you are no longer alive.
Death is inevitable, but while you are still alive, you should look for means to provide for your loved ones so that when you die, they will not be stranded.
All thanks to term life insurance, you still cater for the needs of your family even when you are no longer alive. If you die while your term assurance policy is still active, you will leave behind a huge amount of money for your family members or beneficiaries.
What is Term Life Insurance?
Term life insurance, also known as term assurance, is a type of life insurance that provides coverage for a specified term or period. Unlike permanent life insurance policies, such as whole life or universal life insurance, term life insurance does not accumulate cash value over time.
Instead, it offers pure death benefit protection for a predetermined duration, typically ranging from 10 to 30 years.
What this means is that if you live beyond your policy, your beneficiaries will not receive any money. However, it is possible to renew your policy if you want to.
If you keep up with your premium payments, your insurer will pay a specific amount of money to your beneficiaries if, for any reason, you are no longer alive.
How Does Term Life Insurance Work?
Getting a term assurance policy is pretty easy. During the application, your insurer will look at your age, term length, health, and death benefit to calculate the cost of your policy. After that, you will make premium payments for the length of the policy.
How Much Does Term Life Insurance Cost?
The most affordable type of life insurance is term assurance. It is not as expensive as people think it is. However, the cost depends on various factors.
• Gender
Your gender is a criterion your insurer will look out for when telling you the price. It is believed that men die at a younger age than women. For this reason, men may pay more for life insurance.
• Age
Another thing your insurer will take note of is your age. Younger people are given lower premiums than older people. This is because younger people are not likely to die soon.
• Health
Most insurers will tell you to take a life insurance medical exam and answer health questions.
Benefits of Term Assurance
It is important to know the benefits of term assurance. If you still doubt the importance of this life insurance coverage, the benefits will prove otherwise. Let’s take a look at the benefits below.
- Affordability: Term life insurance is typically more cost-effective than permanent life insurance, making it a budget-friendly option for individuals and families.
- Fixed Premiums: Term life policies often come with fixed premiums throughout the chosen term, providing predictability in financial planning.
- Financial Protection: It offers a death benefit to beneficiaries in the event of the policyholder’s death during the specified term, providing financial support for dependents and covering debts.
- Flexibility: Policyholders can choose the coverage period based on their specific needs, such as raising children, paying off a mortgage, or getting through a critical period of financial vulnerability.
- Simple Structure: It is straightforward, focusing on providing pure death benefit coverage without the complexities of cash value accumulation found in some permanent life insurance policies.
- Renewability: Depending on the policy, there may be options to renew the term life assurance coverage at the end of the initial term. However, renewed policies often come with increased premiums.
- Quick Payouts: In the event of the policyholder’s death, term life assurance policies generally offer a quick and straightforward claims process, ensuring that beneficiaries receive the death benefit promptly.
Term life assurance is particularly suitable for those seeking temporary and cost-effective coverage.
What Does Term Life Insurance Cover?
Term assurance offers few coverages, and they include
- Deaths caused by illness
- Accidents
- Deaths of all causes
It also covers any kind of death caused by old age.
What Does Term Assurance Not Cover?
Your term assurance policy does not offer some coverage, and it includes:
- Deaths due to a cause that was misrepresented on the life insurance application
- Incidence of suicide within the initial two years of the life insurance policy
These are the coverages that term life does not offer. Also, it is advisable to confirm with your provider before purchasing.
What Affects Term Life Insurance Premiums?
Your term life insurance premium will be affected by your age and, most often, your health. Young people without any pre-existing health conditions are at lower risk, and they are qualified for the lowest premiums. Also, you should expect higher premiums as you age and develop health conditions.
Who Should Consider A Term Assurance Policy?
If you are a newlywed or married couple, you should consider term assurance. Also, people who share expenses with their partners should consider this insurance.
Parents, guardians, and people planning on having children should purchase term assurance.
Where Can I Purchase Term Life Insurance?
You can purchase term life insurance from an individual insurance company. Also, you can purchase from an independent broker that works with multiple companies. You will be asked to fill out an application or make a phone call with an agent.
After that, you will have to wait for the insurance company to review your application and give you your final rate. Then you can pay your first premium once you sign the policy paperwork.
FAQs
What Happens to Term Life Insurance at the End of the Term?
At the end of the term, your term assurance policy expires. If the policyholder dies after the term life policy’s expiration, their beneficiaries will not receive any death benefit.
How Do I Buy Term Assurance?
The process depends on the company or broker you intend to use. The first step is to shop around for a term insurance policy that aligns with your needs. Once you have found one, you can contact an insurance broker or agent to start the application process.
How Long Does Term Life Insurance Last?
Normally, term life insurance lasts up to 30 years of coverage. Note: It is possible for your policy to end if you reach a certain age, which is around 65 years of age.
