All About Term Life Insurance

All About Term Life Insurance

By Sarah Martin

If you look to the dictionary to define term life insurance you will find that it is "life insurance for a specific period of time." You must make annual premiums for the life of the term in order to keep the policy up to date.

You cannot try to mask the truth when you take out term life insurance. Level term life insurance is the most common option because you pay the same amount of premium for the same coverage over the term of the policy.

One of the clauses that many people like to have in their term life policy is that of waiver of premium.

Term life insurance is one of the types of life insurance policies you can purchase. This type of life insurance will only pay the amount of the policy to your beneficiary if you die during the term specified in the policy, which could be between one and thirty years depending on the length of term you choose.

It is the simplest form of life insurance in that you choose the amount of life insurance you need and make the annual premiums for each year of the term. If you are still alive at the end of this term, then this policy is no longer valid and you have to take out another policy for another term.

Within term life insurance there are two types of policies - level term and decreasing term. Level term is the most commonly purchased policy because it pays out the same amount when you pass away at any point during the term. Your age is a determining factor though, because if you take out life insurance at age 65, very few insurance providers will provide you with a policy beyond the age of 80, so this would shorten the term.

When choosing a term life insurance policy, a renewable policy is really something that you need to look for. With this type of policy, when the term ends, you have the option of renewing it for another term. The premium that you pay for term life insurance depends on several factors. Your lifestyle also factors into the cost as well. You will have to pass a medical check by a doctor to ascertain that you are in good health as well, unless the company offers no medical exam life insurance. Your occupation will play a part if you work in a field classified as dangerous, such as working in a mine.

The premiums will remain level for the length of the term. In a renewable policy, the premiums increase at the time of renewal. The reason that level term insurance is more popular than decreasing term insurance is that the amount paid to the beneficiary remains the same throughout. With decreasing term insurance the amount of the payout decreases each year of the policy, which means that if you pass away about a month before the end of the term, there is no money left in the policy to pay to your beneficiary.