Understanding Your Term Life Insurance Policy

Life insurance helps the insured to secure the future and welfare of loved ones after death. It is one excellent way of showing loved ones you care about them and are thinking about their welfare and well-being after your own death. Most people have opted for life insurance in order to make sure that loved ones and dependants will be taken care of even after death. One can choose to take out permanent life insurance policy or a term life insurance policy, depending on one’s needs and pocket. Unlike permanent life insurance which covers one’s life until date of death and may also have an investment benefit packaged with it, term life insurance policy cover works differently, and has its own pros and cons. When choosing term life insurance policy, it is important to have all the information, in order to make an informed choice.

What is a term life insurance policy?

A term life insurance policy is temporary and not for life. It is a life policy with a set limit on the duration of the cover period. Once the term of the policy, which is usually 20 to 30 years, expires; the policy owner can elect to renew the term life insurance and continue paying premiums, or to let the policy cover come to an end. Term life insurance policies provide a benefit upon the death of a person on condition that the policy owner dies within a specified period of time. With term life insurance policy, as long as one pays the monthly premiums, the policy is kept up to date and is in order. In most cases, the premiums do not go up even when one’s health deteriorates. Rates are usually fixed and the policy owner’s obligations remain somewhat the same for the duration of the policy.

One drawback of term life insurance is that if nothing happens to you at the expiration of the term of the policy, you will lose all the contributions which you would have made. You will therefore continue your monthly premiums, and if you are still alive, you can write those contributions off. However, one can elect to terminate their policy when they feel that they do not need it anymore. Literally, life term policy is one of the plans to fall back on in case something happens, and if it does not, then life will continue, and one would have lost.

What are the benefits of term life insurance?

Term life insurance is available to anyone who looks forward to providing his or her family with steady income especially after death. The one benefit is that with term life insurance policy, you will not leave your loved one empty-handed to struggle with day to day expenses, but you stand to leave them behind with replacement income. Secondly, term life insurance is much cheaper than permanent life insurance. For life insurance policy that will leave you with some change in your pocket, term life insurance is ideal. Furthermore, it has now become mandatory to take out life insurance, especially if one has family, a house on mortgage still to be paid off and a car on vehicle finance. Term life insurance therefore becomes a way of making sure that one has some form of life insurance cover, even when they may not be able to afford comprehensive or permanent life insurance cover.