Explanation of Term Life Insurance

Do you need an explanation of term life insurance?

If you are considering the purchase of life insurance you may want to learn about the two basic types of life insurance: Term Life Insurance and Permanent Life Insurance.

Term life insurance is temporary coverage for a specific number of years. You can choose term life insurance for a period of 10, 15, 20 or 30 years.

Permanent life insurance is lifetime protection, as long as you pay your premiums. It builds cash value within the policy.

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Benefits of Term Life compared to Whole Life Insurance:

  • Term life insurance is usually 2-3 times cheaper than permanent life insurance.

  • Term life offers you greater flexibility in coverage only for the length of time you need it.

  • Since term life is less expensive than permanent insurance, you can afford to purchase a lot more protection for your family.

Example of Term Life Insurance:

$500,000 20 year level term life insurance policy with annual premiums of $350.

This example means you pay $350 each year for 20 years and you have $500,000 of life insurance coverage.

If you die before the 20 years ends, your beneficiary will receive the $500,000 death benefit usually free from federal income tax.

If you are alive after 20 years, your term life insurance policy expires and you have no coverage.

Term life insurance policies do offer you the option of Renewability, which means you may renew your current policy when it expires, without having to take a physical exam to prove you are healthy and qualified.

However, at renewal, you will have to pay the higher rate based on your age at that time.

The most popular type of term life coverage is level term life insurance that offers you guaranteed level rates and coverage for up to 30 years.

Common Reasons People Choose Term Life Insurance:

  • They have a young family.

  • To pay off their mortgage loan.

  • They are on a budget and need the most affordable life insurance.

  • They need the most life insurance protection for their family they can get.

  • They have temporary life insurance needs for 1-30 years.

Whether you are young and own a home, are starting a family, have children in school, or need temporary life insurance for 30 years or less, term life insurance may offer you the coverage that meets your life insurance needs, and fits your budget.

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