Understanding Simple Term Life Insurance
Many people who shop for life insurance notice one thing very quickly! The realize that term rates are lower than the rates for whole or universal life insurance. Of course, US consumers are pretty smart. They want to be sure they are getting good value for their money, and they are not just interested in the cheapest rates. Take a moment to understand term life insurance!
First, take a moment to undersatnd why term costs less. If you do get any sort of offline or online insurance quotes, you will want to know what you are shopping for! That way, you can be sure of getting good value for your money.
The word "term" means that the policy contract will last for a length of time. That could be a very long or fairly short period of time. You can find policies with six month terms, and you can find policies with 30 year terms. But no matter what term you choose, the policy is considered termporary. It does have an end date.
What about the day after your term policy ends? After it expires, a basic term life insurance policy has no actual value left. This is, of course, why term policies are cheaper. When you buy whole or universal life, the policies cover you as long as they are kept in force. This sill not be true when you purchase an insurance policy that is temporary.
Why do people buy term? SInce these policies do expire with no value, what are the advantages to buying them? I did, of course, mention that rates are lower. You are only paying for coverage, and you are not paying for the policy to build up a cash value. The lower price means that you may be able to afford a lot more coverage. Many consumers decide to purchase term because it is a way to get more insurance for less money.
A lot of our needs are temporary anyway.Consider this example. Let us say you want to cover your home mortgage. When you still owe money on your home loan, it will be important to have a larger policy. When you have paid off that debt, you may want to lower your coverage. It makes sense to buy affordable coverage now, while you have a large need for life insurance. Later, when you needs have gone down, you may decide to cover yourself for a much lower amount.
To give yourself more future options, you may want to buy a term policy that can be converted to whole life in the future. This way, you can get cheaper term life now, but still have the option to switch to a permanent policy later. Another rider you may want to consider is called return of premium (ROP). It actually returns your premiums if you do not have to make a claim on your term policy. Most of this article just descriibes a very basic policy, but there are options that can make your coverage more flexible and powerful.
How can you find a term life policy? You can find many good insurance agents in your local area. If you would like to narrow down your search, you may try to use online life insurance quote forms too. There is not one best company, and there is not one best way to do things. Shop for insurance the way you like!
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