Term life insurance is a simple form of insurance that can provide peace of mind for you and your family. Term life insurance is simply insurance cover that lasts for a restricted time. If you're on a low budget and you buy term life insurance, you will get excellent temporary cover. Once it has run its course, you can buy it again, renew it or extend it, or you can leave it expired. Term life insurance will pay out if the you die, provided it's within term.
If you buy life insurance, it isn't a way of building up a cash lump sum. There's a level premium that's set depending on factors such as age, health, location or other factors the insurance company deems important. The younger you are the lower the risk the insurance provider sees you as.
Term life insurance is good for the insurance company. The number of claims is around 1 in 100 which is very low. This is also good news for the insured as it keeps term life insurance premiums low. If there happens to be a payout to dependents, it will usually be a very generous one.
This all means that buying term life cover is great on a coverage per premium basis, as there is such a slim chance of the insurer having to pay out.
with term cover, there can be some problems that occur. For instance, insurability is an important issue. You could take out term life insurance for one year and be diagnosed with cancer within that year. However, you might not actually die until after the term life insurance has expired. This would make you unfortunately uninsurable.
However, there is a feature on some term life insurance policies called guaranteed reinsurability that gets around the issue. This will let you renew your insurance without needing to prove your insurability.
Annual renewable term is another variant of term life insurance. You would pay for one year's cover, but be given a guarantee that your policy can carry on each year for an agreed period of between 10 and 30 years. The premium is greater for a years cover, however there is a higher chance of the policy paying out.
You must keep up with the payments on your life insurance policy once you have purchased it, though. Failure to do so could mean your dependents not being paid out if you die. For that reason, it's best to automate your term life insurance payments by paying by direct debit. You could also do worse than have some independent expert assess your small print, too, as failure to disclose even the smallest health problems could render your term life insurance policy invalid.
