Term Life Insurance is a coverage policy for a fixed duration. The duration of life insurance policies varies from five to 30 years in general. Since term life insurance plans only offer coverage for a fixed period of time, term life insurance is far less costly than whole life insurance, which offers a guaranteed death benefit regardless of the death of the insured. Another explanation why term life insurance is so cheap compared to life insurance is that many life insurance policies have an investment account which adds to the policy ‘s cost. While some people benefit from the investment part of a whole life insurance policy, most people would benefit more from maintaining separate insurance and retirement accounts.
Not only is term life insurance the least expensive form of life insurance, it is the safest type of life insurance for most people. Term life insurance provides cover during the most important years of financial need for a person’s family. For instance , a person with young children can purchase an insurance policy that offers coverage for 20 years easily until the young children have developed into adulthood and are no longer dependent on the parent to receive financial assistance. The insured person will also have time to pay off mortgage and other obligations over this 20-year period, and accumulate retirement funds that will further minimize his or her life insurance needs.
Term life insurance plans are usually a fixed term , meaning that the premium for the duration of the policy does not change. Most plans on term life insurance are adjustable plans. The insured person is thus able to convert the term policy to a full whole life insurance policy at any time. The biggest benefit of convertibility is that, even if the insured has health conditions that would otherwise preclude a person from being entitled to coverage, he is eligible to collect full life insurance. This conversion can of course result in a higher premium as the insured person grows older. In general, an insured person with a term life policy may also extend the duration of the original policy in all circumstances at any time. For certain insurance companies, life insurance premiums are also rising and declining. To satisfy the needs of the insured group, the death benefit of these policies rises or decreases over time.