The Basics of Term Life Insurance

What is Term Life Insurance?

Term life insurance is a temporary life insurance policy that offers death benefits to the policy holder’s beneficiary in lieu of premiums paid during a particular term period. Terms can be for one year (renewable), 5, 10, 15, 20, 25, or 30 years.

Term life insurance is popular because it offers high death benefits at cheap premiums. This is good for families who have financial constraints and yet desire high coverage for their family. Growing families usually opt for term life policies.

Types of Term Life Insurance

There are two basic types of term life policies:

1. Level Term Life Policy. Level Term, as the name indicates, the death benefits remain level during the entire term period.
2. Decreasing Term Life Policy. A decreasing term life policy begins with a high premium and high death benefits which decrease as the term comes to an end.

Options in Term Life Insurances

Term life policies do not offer any cash value or surrender value. There is nothing gained by the policy holder, if he or she should survive the term on a standard term policy.

There are options available in term life policies which can give you some added advantages:

• Renewability options. This is useful should you survive the term period and anticipate needing continued coverage. Renewability options give you the advantage of continuing your term life policy for another specified term without having to provide proof of insurability.
• Return of Premiums(ROPs). If you have paid up all premiums during your term period, this option returns to you the sum of all premiums paid when the policy comes to an end. This option will generally cost you 20% to 30% more than a standard term policy.
• Convertability Options. This option allows you to convert your term life policy to a permanent life policy, without having to provide evidence of insurability. Some companies allow convertability only in the first few years of the term policy; others may allow it at any time during the term period. This can be to your advantage if you feel that at some later stage in life you would like to have the option of converting to a permanent policy.
• Other Features. Some life insurance companies may offer add-on features such as:
  • Waiver of premiums in cases of disabilities that last six months or longer. In such a situation, you may not be able to pay premiums. Waiver features prevent your life policy from lapsing in such cases.
  • Accelerated death benefits allow the policy holder to draw early benefits from his life policy if suffering from a terminal illness. Such benefits help to pay expenses for treatment.
  • Accident riders. This features doubles or triples the life coverage if death occurs by accident.

Why Should I Buy Term Life Insurance?
There are several vital reasons why you should insure yourself, particularly with a term life policy. These could be:

• Cheaper premiums, high death benefits
• To provide the same standard of living for your family after your demise
• To provide for an education fund for your children
• To pay off debts, mortgages so that your spouse and family do not inherit these debts
• To meet funeral expenses
• To meet federal tax payments on the estate
• To provide for you aging spouse
• To protect your spouse’s retirement savings

Life insurance can be purchased at any stage in life and it is as essential for married couples with growing families as it is for the elderly. You may be a single parent, or a stat-at-home parent, life insurance can provide much needed cash for your family even after you have died. Knowing that your precious family is provided for can bring you peace of mind and a sense of security.

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About AccuQuote:
AccuQuote is a leader in providing term life quotes to people across the United States. In 1986 it began operating with a single goal: to make the process of buying term life insurance as easy as possible for its customers. Their experienced professionals consistently deliver the most affordable term life insurance rates by comparing thousands of life insurance policies from dozens of top-rated carriers.


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