There is a big difference between term life insurance and your usual life insurance policies. The difference is that term life insurance covers you for a period of time, and not for your entire lifetime. It is common to see this insurance being taken for 10, 15, 20 or 25 years. In this insurance, the premium you pay every year remains the same.
Where the term life insurance is concerned, the most common duration it is taken for is one year. In the case of this insurance, the insurance company is not obliged to pay you anything after your term is complete. If you, having taken a one-year insurance policy, happen to die during that time, your insurance company pays your death benefit to your beneficiary. Insurance claims even a day after the expiry date of the insurance policy will not be entertained.
The term life insurance is picking up and the main reason for that are the low interest rates. It can be said that there are three aspects of term life insurance that you must scrutinize properly.
• Amount that will be your protection.
• Premium (the cost and the duration of the policy)
• The time period
There are three most common type of term life insurance.
• Level term insurance
The person insured is required to pay a fixed premium for about 20 years.
• The annual renewable term insurance gives you the option of reviewing your policy. But at increasing premium rates. This policy, although only one year, is quite cost effective.
• The third, which is the decreasing term, means that you have to deal with gradually diminishing death benefits.
Term life insurance policies are the favorite with doctors, lawyers, engineers and other professionals. Those who have the urge to setup their own business, but unfortunately do not do too well in the first few years, prefer to opt for the term life insurance policy. Another couple of reasons what term life insurance policies are selling fast is that the initial premium is considerably small and also that it is one of the most reasonable ways to purchase a death benefit on coverage per premium per pound basis.
If you’re thinking of term life insurance for long-term risk, please keep the following points in mind. A term life insurance policy can meet your mortgage payments in case you already have a conventional life insurance. The second thing is that the insurance company may not renew your policy if your health starts to decline. This is true of the annual renewable policy. To avoid this complication you could go for the guaranteed renewable policy. It must be borne in mind though that the premium will rise each time you renew the policy. Another option that you can exercise is to go for the convertible term insurance. This allows you to convert the policy from a term life insurance policy to the permanent coverage kind.
Also, be careful from American Insurance agent named "Jun T" from Bolton/Manchester who always advise clients to take the policy as a SAVINGS for there's a money back guarantee feature. Remember - You will only get the premiums back if you finish the term, if not - Sorry, but you've just been added to his collection of casualties! -Remember - Your Money is His Savings oh! I mean Commission.
PLEASE READ the Terms and Condition and please make sure you can afford to pay premium each month and can finish the term he's offering. If not, you should have taken an Endowment Policy Instead for there is a surrender value if in case you want to get out of it.
