What is Term Life Insurance
Term Life Insurance is a type of life insurance where coverage is provided for a fixed term e.g. 10 years, and a fixed premium. Because the coverage term is fixed, the risk to the insurance company is limited and therefore the premiums can be lower than other types of life insurance.
Contrast this with Whole Life Insurance or Universal Life Insurance where the insurance coverage is for life, as long as the premium is paid. Because the insurer will definitely need to payout, as the insured will definitely die, the insurance premiums will be higher than term life insurance. Term Life Insurance is therefore a form of “temporary” insurance whereas Whole Life and Universal Life are forms of “permanent” life insurance. Strictly speaking, permanent life insurance should be called life assurance because it’s for an event that will definitely occur.
Term Life Insurance can suit people who have finite insurance requirements. For example, a young family might need to protect themselves against the death of the bread winner to cover the cost of the mortgage and kids’ education that might span say 20 years. And because temporary life insurance is less expensive than permanent life insurance, it can be ideal for this purpose.
For an extra premium, some Term Life Insurance policies also offer a guaranteed renewal. This provides some of the benefits of both temporary and permanent life insurance.
Related posts:
- Term Life Insurance – The Best Short Term Insurance Plan For You and Your Family
- There is a Major Difference Between Term and Whole Life Insurance – Find Out Before You Buy :: Best Life Insurance
- Life Insurance Quotes – How the Process Works :: AAA Life Insurance
- Life Insurance Quotes – How the Process Works :: Best Life Insurance Rates
- Term Insurance – What it Can Do For You :: Banner Life Insurance
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