Understanding Term Life Insurance Policies

Life insurance is basically a contract between an insurer and an insurance issuer or insurer, in which the insurer agrees to pay out a designated beneficiary an agreed sum of cash upon the untimely death of that insured individual. Depending on the contract, payment may be made for a host of events like critical illness or terminal illness. Some contracts state that payment may be made for any loss resulting from death or disability while some specify the only loss that can result from disability is death. Regardless of the terms, it is a fact that the insured individual has a right to be paid for the agreed sum upon his/her demise.

Many people opt for term life insurance over whole life insurance because it allows the beneficiary more time to manage his/her affairs. Term Life Insurance is the most common type of policy type and is purchased by people who want a quick payout. These policies can be renewed at the end of the insured’s life. However, not all insurers offer this policy type.

Another popular form of permanent life insurance options are the variable universal life and whole life insurance policies. This particular policy gives the insured the option to choose from a fixed cash value, or value range, which varies according to the investments chosen. These policies can further include dividends and other features. It is important to check with the insurer before buying a permanent policy to find out what kind of benefits the plan can provide you with.

Many people prefer whole life insurance over term because it allows the beneficiary unlimited benefits; however, there is no legal limit to the number of payments that can be made. Most policies give the beneficiary the choice to make additional payments after the original policy has expired. This helps the beneficiary make sure that he/she receives everything they will need, even if their financial situation changes in the future. Unlike other forms of policies, whole life insurance does not restrict the amount of payments that one can make. You can make unlimited monthly or yearly payments according to what suits your budget. Some insurance companies also allow you to have a portion of your interest accumulated as a bonus, which could be withdrawn at any time without penalty.

Choosing a policy type can determine the cost of a plan. Insurance premium rates vary depending on factors such as the age of the insured, gender, health history, marital status and the number of years for which a person has been covered by an employer. Most insurers also offer discounts for certain policy types, such as whole life insurance. While premiums for these types of policies are typically higher, they provide financial protection for families for a longer period of time. In addition, term life insurance can be bought at very low premiums if the time span for the desired level of coverage is reasonably short. The same is true for universal life insurance coverage.

One advantage of term life insurance sold by many insurers is that the policy can be renewed after its expiry if it meets the needs of the family. This renewal option is usually simple to do. If you want to renew term insurance coverage, all you need to do is call your insurer and tell them that you want to renew your coverage. Usually, your provider will not charge you any extra fee for this.