Term insurance policy is the oldest and popular form of life insurance. Under term insurances, the insurance company promises to pay the sum insured, if the life insured dies within the period specified in the policy (5, 20, 15, 20 year term insurances) if the life insured is alive at the end of the period, the policy terminates on that date and the life insurance protection ceases.
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Live Your Life Insurance
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The Best Life Insurance Policy For You - Term Life Versus Permanent Life
Understanding the differences between the various types of life insurance policies will help you to determine which is the best life insurance policy for your and your family's needs. This article discusses the term life and permanent life insurance and the four main differences between them.
1) Length of coverage. Term life coverage is for a specific amount of time. Common time periods are 5 and 10 years but there are many other term options. When the term expires, so does coverage. Permanent life provides coverage for as long as you live.
2) Cash value. Term life policies gain no cash value. Permanent policies have cash value within the policy that you can have access to. As you continue to pay your premiums over time, this value grows and is tax deferred.
3) Policy expiration consequences. There are obviously none of these with a permanent life policy because the policy never expires. However, with term coverage, when the policy ends there are two main consequences that can occur. First, your rates can go up. You will be older and depending on your advanced age and other factors, your rates could be higher than they were with the previous policy. Second, you will likely be asked to take another health test.
4) Cost of the policy. This is a major consideration for most people when they choose a policy type. Be aware that term life policies are much less expensive than permanent life policies. Depending on what your financial situation is at the time, you may want to keep this in mind when you choose.
Choosing the right life insurance policy is a very important part of providing for your family. For help in finding the right policy for you, visit the Affordable Life Insurance Directory.
Recommended Reading
Live Your Life Insurance
Teaches You Surprising and Viable Strategies
For Developing Prosperity Through
Your Life Insurance Policy
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