Term life insurance is a policy that expires at the end of the designated period. Once the term is up, the individual can determine whether he or she wishes to renew the policy. This differs significantly from the permanent variety, which lasts for the life of the individual.
If the policyholder dies while holding a term policy, the beneficiary will receive the death benefit. However, term policies do not include any savings that provide cash value.
The amount that one must pay to hold the policy will be dependent on the person’s age and health. The death benefit is available if the policyholder dies within the specified term. If the policy expires, the policy may be able to be renewed but with a new premium based on current age and health status. Therefore, term life insurance is typically quite affordable during the initial time period of coverage.
Premiums are most affected by the person’s age, health and gender and on his or her life expectancy. If a policy is renewed, premiums will most likely rise because of the lessened life expectancy.
- Level term insurance has fixed premium payments for the specified number of years of the policy.
- Yearly renewable term insurance is renewed annually and may have rising rates as the individual ages.
- Decreasing term insurance has fixed premiums but offers a lower death benefit each year that the policy is in place.
Who Is a Good Candidate for Term Life Insurance?
Term life insurance is best for adults who are young, have young children and make the primary family income. Term insurance is usually carried to replace that individual’s income should he or she die. Term insurance is also beneficial when the amount of debt owed is high such as for mortgages, vehicle loans, other forms of consumer debt, etc.
Term or Permanent?
Choosing which is right is often a personal decision based on life goals. Those who cannot afford high premiums and who only want to carry insurance for a few years usually choose term life insurance. However, permanent life insurance is best for those who can afford higher premiums, who want to use the policy as an investment and who want to be covered for the rest of their lives.
Individuals should consider the rate of return on their permanent policies versus how much they would make with the money in another type of investment. They should also read the insurance riders and provisions and consider when and how they plan to retire before deciding between term and permanent.
Those who are unable to choose between term and life may find convertible policies to provide a great option. This policy allows people who currently have term insurance to convert the policy to a permanent one before it expires. While premiums will rise, individuals will not have to undergo additional medical tests to determine if they are approved.
As you can see there are many options available to our valued customers. If you would like to take advantage of your FREE quote and allow our seasoned professionals give you the BEST suggestion for you and your family, please contact Greene County Insurance today!