What Is Term Life Insurance
Many people postulate the question of what is term life insurance. As the name suggests, the coverage lasts for determined amount of time at the end of which the plan expires. A person who is covered under such a policy has the option to either drop the plan once the term has expired, or they can choose to continue the plan. In order to continue coverage however, a person is required to make annual payments on premiums. There are many benefits to the policies which make them the most common type on the market.
Life insurance might not be on the top of the list of necessities for a lot of people, in fact, studies have been conducted that show over half of Americans do not have coverage that will cover the costs that come with death. People cannot be too prepared for an uncertain future, and those who take the necessary precautionary steps can possible leave their family and friends in a much better financial situation than those who do not. A life insurance policy can be very important for those who are already in financially straining situations. The question: what is term life insurance can be answered as a way to protect against an uncertain future.
During the process of answering the question of what is term life insurance. Those who are interested are able to see that there are a lot of benefits to be had with the plan. For example, those who are covered have the ability to name a beneficiary of their choosing. A beneficiary is a person, group, business or organization that intends to receive the value of the policy in the event of the holder's passing. There are many different types of plans available on the market and another option available with term insurance is the ability to customize a plan to fit the needs of the individual.
There are many types of plans available on the market, and term insurance can be found to be some of the most common due to the relatively inexpensive rates. Premiums do increase as the one who is covered increases in years so the policies are cheap, but only within the first ten to twenty years or so. Every person has individual needs, and enough plans are available on the market that there is sure to be a plan that will fit everyone in need, with rates that are affordable. In the process of discovering what is term life insurance, a person is certain to come across information that will help to determine what plan is the best for them.
After those who are interested have answered the question, what is term life insurance, they can begin the application process. Those who apply are required to undergo a physical examination in order for the provider to make certain that the person can be insured. Standard health checks are necessary, and minor blood work might also be required. When one has passed the examination they are offered various types of plans. For example, some run on a seven year plan while others can last for up to ten years. Coverage will continue as long as the premiums are paid.
Term insurance makes the most sense for young people who need to have coverage for only a short period of time. One of the main advantages to the policies can be for young people to seek such plans as premiums are at their lowest in the beginning, and then increase with time. There also can be the added benefit that the premiums will not increase over the course of the predetermined amount of time. For example, the rates of premiums at the beginning of a seven year time span will remain constant until the end of the seventh year. Those who are in need can find the answer to the question of what is term life insurance to be very helpful.
There many ways to find information the types of plans available that can help to prepare for an unexpected future. The Internet can be an excellent source of information for those who harbor the question of what is term life insurance. A wide array of financial web sites can be found which are full of helpful tips and bits of advice that can and should be taken into consideration throughout the process of shopping for the best plan. People who are confused can rest assured knowing that all questions can be answered when one knows where and how to look. Internet savvy individuals can find sites that offer price quotes on different plans so as to ensure that a person receives the best possible deal.
One of the best ways to answer the question of what is term life insurance can be by describing the coverage as wise and necessary preparation for the unfortunate passing of an individual. No one can be certain that they will live to see another day, however, people were also not meant to live in fear, "For God hath not given us the spirit of fear; but of power, and of love, and of a sound mind" (II Timothy 1:7). An adequate life insurance policy can help to provide the comfort that comes from knowing that actions have been taken to make certain that a person's passing will be adequately covered and that any loved ones, family or close friends left behind will not have to deal with a financial burden on top of their loss.
Long Term Life InsuranceLong term life insurance is a very smart thing to have, especially if one is young and just starting a family. Insurance rates for life insurance or living indemnity policies are among the cheapest that they have been in decades. Once a person has locked in a rate that takes into consideration youth and no health problems, this low premium can be in place for several decades, while the children grow and then strike out on their own. At a time when a person is in his fifties or early sixties and the peak earnings years have enabled the insured the ability to save and invest, then there is no need for indemnity coverage anymore. In essence, the insured become self insured through the amassing of an estate.
Consider the fact that a five hundred thousand dollar long term life insurance policy for thirty years may only cost a twenty five year old married person a hundred dollars or so a month. For the next twenty years either the wife or husband, whichever is the policy holder, can know that in the event of his or her death, the family will be taken care of financially until the children are out of the house and on their own. The coverage is a defined parameter indemnity plan, the least expensive of the three options a person has in buying a living indemnity policy. In the meantime, as the family begins to handle their money wisely and begins making investments in stocks, bonds, CDs and money market accounts, the couple is amassing their own financial estate. Eventually, the family will have enough money to handle the death of one or both parents and the need for extended coverage will go away permanently.
A living indemnity policy is designed to help younger people have the protection they need for the years before their financial nest egg is complete. It is certainly not a product for those over fifty to begin looking at for coverage. By the time that age has been reached, health issues and sometimes a long list of medications has been compiled, wiping out actuarial confidence in the longevity prospects for a person. So the time to get a long term life insurance plan is when one is young, but make sure and get the right kind of policy. The seasons of life can quickly move from one to another but one can only see them as the wisdom of years makes it all clear. "To everything there is a season and a time to every purpose under heaven; a time to be born and a time to die..." (Ecclesiastes 3:1, 2a)
The life insurance industry, across the board, has three basic types of policies: term, whole and universal. These policies ranks in terms of premium expense from term to universal to whole, and each has its own identity in the indemnity world. If a person is never going to save any money in his life, never put money into a 401 (k) or an IRA, then maybe the choice of the whole living plan is acceptable. The whole plan pays the face value in case of death, but it also accrues value over a long length of time. The actual amount of the value is dependent on financial factors including interest rates. Basically, the plans often pay interest no greater than passbook rates, and financial experts do not recommended them over a disciplined savings strategy. A long term life insurance plan that is anything other than term insurance is a bad financial deal for the insured.
Oh yes, the universal plan. Various indemnity companies will call their universal products by various names, but they are all the same in basic structure. They are the second highest cost of premium product life indemnity product offered. They offer a mixture of term insurance and whole life, paying a lower rate of return, but offering both payments on the face value of the policy as well as a small cash value if the policy is maintained over an extended period of time. Financial experts also pan these options as a poor substitute for a combination of long term life insurance coverage from a term type of policy and a good investment program.
By all accounts, a long term life insurance plan ought to be the product of choice for long term life insurance needs. Called "pure" insurance by financial experts, this type offers low premium costs for the amount of coverage received. Pure because term policies are not trying to provide a poor return savings account cash value, but rather simply a maximum death benefit for the low cost. Remember that agents for large indemnity companies make large commissions on whole life plans. That will be the kind that each rep would love to sell, but they are not the smart financial choice to make. Stick with the term policy.
A long term life insurance policy should be part of an overall financial plan. The components should include a personal retirement account, a company 401 (k) and regular deposits into Social Security. A large sum term insurance plan can help fuel those accounts should a breadwinner suddenly be taken from a family. Make sure when buying one of these plans to choose a company that is strong financially. Some insurance companies have been known to go belly-up and a person would have to get a new plan with higher rates from a new provider. Rating agencies are available online to give an idea of the financial girth of the company you are considering.