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What is “term” life insurance and who can benefit from this type of life insurance?
“Term” life insurance is one of the simplest types of life insurance policies available. This basic type of life insurance tends to be the most inexpensive type of policy available because it only has one specific function. Term life is designed to pay a lump sum amount upon the occurrence of a specified event such as death to the designated beneficiary. This amount is based on the policy coverage and is equal to the coverage limits found in the policy.
For example, if your spouse has coverage on a policy in the amount of $250,000 and your spouse dies, you will receive a lump sum payment of $250,000. Of course there is some paper work this will need to be submitted to collect the insurance money. Most of the time this is just a copy of the death certificate and to fill out some forms that will be sent to you from your insurance company.
These benefits supply the beneficiary with the replacement of loss salary of the policyholder, as well as, benefits to help cover the cost of the expenses incurred by your death such as funeral expenses. Anyone can benefit from term life insurance because it is the most basic form of life insurance. Because it pays a lump sum amount to the beneficiary this can be very useful when trying to replace lost income resulting from death and to help provide a level of financial security for those who are left behind.
However some may find that because this type of insurance does not have an investment option that this may not be the most beneficial type of coverage to have. There are many different types of life insurance available to most people. Each type comes with its benefits and downfalls.
To find out what coverage is right for you, visit InsureMeOnline.com and speak with a knowledgeable representative to the get the most affordable and complete list of life insurance rates available to you.
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Term vs. Whole life insurance, which is better?
There has always been a great debate about what kind of life insurance that you should carry. Some say that there is more benefit to carrying term life because if you die during the course of your policy then your beneficiary gets exactly what you paid for. While other would say that is better to have a steady premiums that will never increase over the course of your life that you get with whole life.
With term life most of the time the premiums are cheaper than whole life but at the end of the set term the policy expires and so do the cheap premium that you were paying. This is because you bought a policy for a set amount of time or term, and now that that the policy has expired you are that much older. Your age is used to calculate your premiums so you might have gotten a nice cheap rate when you started your policy at 27 but now that you are 42 the rates have increase significantly. And beside the change in your age, you could have also had a change in your health history and they may prevent you from even receiving life insurance. Although the old saying has always been “buy term and invest the rest”. This may be an option for you if you feel you want more than just your policy amount to ensure your future.
Many times is where whole life insurance comes into play. Whole life offers the cash value as an added benefit to the policy. This is because you pay more in premiums, which are used to not only, pay the premium, but then the rest is put toward the investment part of the policy. But there is a downfall to this plan. Many times you do not get to choose where your money is being invested, the option is left up to the insurance company that you have your policy through. So basically you give them your money and they decide what to do with it. This may seem like a scary option for some but it also has its benefits. Because your policy is whole life or permanent insurance your premiums stay the same through your entire life as long as you pay your premiums and the cash value that is invested can be seen as an extra bonus for people who know that they will need extra money to cover expenses when they are gone.
So which is better? In the end it really depends on what your needs are as an individual. One option maybe more beneficial than the other. To see what kind of policy works best for you and to get the most affordable rate quotes for life insurance go to InsureMeOnline.com. Fill out a quick form and get your rate quotes in just minutes.
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