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Term life insurance
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Let us discuss what exactly term life insurance is in this article, and we will allow a separate article to be followed which will discuss permanent life insurance. This article, as well as the one to follow covering permanent life insurance, will be strictly informative, and we will make sure to add a third article which explains how you can decide for yourself which one, or combination of both, will suit your needs best.
Term life insurance is often the most inexpensive way to be covered by a death benefit on a coverage amount, per premium dollar basis.
There are three man reasons which explain why it is the most affordable way to buy insurance.
-Coverage is temporary
-Chances of dying during the coverage period is very small
-You don’t accumulate any savings for yourself, entire premium you pay goes to cover the insurance
You can decide how long you would like to be covered for. The most popular coverage durations purchased today are for 20 year or 30 year policies. If you purchase a 30 year policy, as long as your premiums are paid, your beneficiaries will be paid the full death benefit amount you agreed to be covered by, tax free, should you pass away within those thirty years.
Chances of dying within coverage duration
According to insurance industry studies throughout the years, the probability of dying while the term is in force is very low. As a percentage, approximately 1% of term policies pay out a death benefit, because of the low likelihood of a random healthy person dying in a short, fixed amount of time.
Purchasing term insurance is a lot like renting a house. You can rent at a lower cost than owning for 20 or 30 years, but you don’t build up any equity.
