Basics of Term Life Insurance

Picking a marriage partner can seem easier than picking life insurance. You’re barraged with jargon, percentages, forms and overly eager accountants. So, what life insurance do should you pick? Most financial experts agree that the best kind of life insurance for the average person is called “term insurance”.

“But I know what the term “insurance” means,” you cry.

No, I don’t mean that kind of “term insurance”. Term insurance (often called “pure insurance”) is a type of life insurance. It only covers you in a predetermined length of time, like five or ten years. The usual term life insurance policy is for twenty years. If you (heaven forbid) die within that time span, your inheritors get a tidy sum.

If you don’t die, you don’t get anything money (but you do get peace of mind), but you can renegotiate for another term insurance policy. There is no cash value for term life insurance. The advantage to term insurance is that it’s the cheapest life insurance you can buy.

Why Would You Need Term Insurance?

It makes sense to have life insurance if you have kids, a business or even if you just bought a house. For example, if you buy a twenty year mortgage and a twenty year term insurance policy, if you die, your family can still pay the mortgage. This is especially important if you are part owner or sole owner of a family business.

Always shop around for best prices and rates. You can even get term insurance for just one year or thirty years. You can get level term insurance or decreasing term insurance. Level term insurance means you pay the same premium the whole time the insurance covers you. Be sure the insurance company can guarantee this some can’t.

They could offer you annual renewable term insurance, where there is a slight increase in premiums every year. Then there’s decreasing term insurance, where the premiums decrease the longer you don’t die.

This kind of life insurance is money well spent to secure your family’s future, or at least, assure them of a place to live. If you don’t have a family or your own business, then there really is no advantage of getting life insurance, let alone term life insurance.