Term Life Insurance: What You Must Know Before Buying
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Term life insurance is becoming quite popular these days. This kind of insurance provides coverage for a limited period of time called 'term'. Because it provides coverage for a particular term it is cacalled Term life insurance. Normally a fixed rate of payment has to be made by the buyer for this kind of insurance. Once the term of insurance is over coverage is not guaranteed anymore. However, if the buyer wants they can obtain coverage again with similar or different payment terms. Why term life insurance is very popular is they are very inexpensive compared to other types of life insurance. They provide quite high sum of death benefit compared to other life insurance on a per dollar coverage basis.
Term life insurance is also the original form of life insurance. The rules for nominee for term life insurance are similar to normal life insurance. So, if the event of death of the insurer, the nominee will get the death benefits. It is different from other popular life insurance products in terms of premium paid. For most other life insurance like whole life insurance or universal life insurance provides life-time coverage for the insurer for a fixed premium. These other forms of insurance normally also provides the benefit of withdrawing of cash value generated over a period of time but withdrawal can be done only under particular conditions. The flip side of the cash withdrawal is that while the insurer gets the cash amount, the policy gets terminated prematurely leaving the insurer with no life coverage. Nominees are not allowed to receive cash values for such policies though they can receive the face value of the insurance.
Term life insurance is similar to other insurance in the sense that if insurance has not expired and premiums are paid properly the insurer will get a claim to the amount specified in the insurance contract. However, both term and other life insurance insurer will not get any money if no claim is filed with the insurance company for the payment of such money. For example, home insurance entitles the insurer to receive insurance benefits in case the insured home is damaged by natural calamities or fire. Now, there is always some uncertainty or risk attached to such events. Whether the home will actually get damaged or not is a uncertain event. In case such untoward event occurs and till that time insurer has paid premiums properly he can claim for the insurance benefits and get the money. However, if the insurer has stopped paying the premiums before the maturity of the policy because he has sold his home - in that case he would not be eligible to receive any benefit or refund of the premiums.
Term life insurance is becoming quite popular these days. This kind of insurance provides coverage for a limited period of time called 'term'. Because it provides coverage for a particular term it is called Term life insurance. Normally a fixed rate of payment has to be made by the buyer for this kind of insurance. Once the term of insurance is over coverage is not guaranteed anymore. However, if the buyer wants they can obtain coverage again with similar or different payment terms. Why term life insurance is very popular is they are very inexpensive compared to other types of life insurance.
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