When to Buy Term Life Insurance
There are a couple of ways to think about life insurance. One kind is insurance that is permanent. This means, you pay the premiums and it is valid for the entire duration of your life. These policies are more expensive and offer their benefits after a period of time. These policies are also more expensive On the other hand, there are some insurance policies that are available for a short term, say five, or ten, or twenty years. This is term life insurance. Once the term expires, a fresh insurance policy will have to be purchased and it is not guaranteed that you will be able to continue with the premiums at the same rate you first purchased them for.
Term life insurance is not as expensive as permanent insurance and is a good option for those with a smaller budget to work with. As usual, if the policy holder passes away during the term, the benefits will be paid to the beneficiary. Once the policy expires, proof of insurability is required. So if you contract a terminal disease within the term, but you actually die after the term expires, it would be highly unlikely that you will be insured for the next term life insurance policy.
So how do you know when to get the term life insurance? First it's necessary to understand the nature of term plans. There are two types of this. One is the annual renewable term. This is the simplest form of term insurance and is for a term of one year. So if the policyholder died during the one year his beneficiaries receive the benefits but nothing is given if he dies even a day after the term. Purchasing this type of policy for this term is rare due to this. The version of this that is common is annual renewable term, where the premium can be renewed each year for a chunk of years, like 20 or 30 years. The premiums increase with inflation. And so, more common than this is the guaranteed level premium term insurance, where the premium is the same for chunks of years.
Ironically, although most would think that they would need term insurance plans when they are old and retired, the time to get insurance is when you are working. If you have a family and dependents, then the sooner the better in fact. So just in case something happens to you, your loved ones will still receive some necessary support. Although the permanent insurance will always pay out, the term a term insurance policy is useful because of its lower premiums and high coverage in an eventuality, even when you are young and kicking.
Term life insurance is not as expensive as permanent insurance and is a good option for those with a smaller budget to work with. As usual, if the policy holder passes away during the term, the benefits will be paid to the beneficiary. Once the policy expires, proof of insurability is required. So if you contract a terminal disease within the term, but you actually die after the term expires, it would be highly unlikely that you will be insured for the next term life insurance policy.
So how do you know when to get the term life insurance? First it's necessary to understand the nature of term plans. There are two types of this. One is the annual renewable term. This is the simplest form of term insurance and is for a term of one year. So if the policyholder died during the one year his beneficiaries receive the benefits but nothing is given if he dies even a day after the term. Purchasing this type of policy for this term is rare due to this. The version of this that is common is annual renewable term, where the premium can be renewed each year for a chunk of years, like 20 or 30 years. The premiums increase with inflation. And so, more common than this is the guaranteed level premium term insurance, where the premium is the same for chunks of years.
Ironically, although most would think that they would need term insurance plans when they are old and retired, the time to get insurance is when you are working. If you have a family and dependents, then the sooner the better in fact. So just in case something happens to you, your loved ones will still receive some necessary support. Although the permanent insurance will always pay out, the term a term insurance policy is useful because of its lower premiums and high coverage in an eventuality, even when you are young and kicking.
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