Knowing the term life insurance definition will help you insure that your purchase is going to be made with the best possible results. When you are considering any type of life insurance, having all of your information ahead of time will insure that you can protect your family and your needs. While you should have a trusted insurance agent to help you, it can be a daunting task to know that they are giving you the best information possible. For this reason, take some time to learn all you need to know about term life insurance.
Term life insurance is a type of life insurance which pays the listed beneficiaries on the policy a lump sum payment when the insured person dies. The lump sum amount is based on the face value of the policy, which can differ greatly. You select the amount of coverage you want available to the beneficiaries should something happen. Life insurance like this can help keep a family financially secure even in a very tragic time, such as when a wage earner within the family dies. Like all types of insurance, it is essential to consider if this is the right type of policy for you.
The next important thing to understand about term life insurance policies is the word, term. The term is the length of time that the policy is in effect and therefore will pay out to the beneficiaries. This term is defined within the policy and can be as short as one year up to a 30 year term. After that time, the policy is not longer able to pay out to the listed beneficiaries. A good way to understand this is to consider term vs permanent life insurance. In permanent life insurance, the life insurance will pay out throughout the entire life. Premiums may change, but you will always have this payout at some point. Additionally, permanent life insurance, which is often called whole life insurance, offers a cash value. When consider whole life versus term life, this may be an important consideration. With whole life, you can secure a loan from your insurance’s cash value or even use the funds to help pay for your retirement. You can not do these things with term life because it has no cash value until the one time death payout.
One type of term insurance to consider is that of joint term life insurance. If you need to provide life insurance that covers both you and your spouse, this type of insurance can do that. It provides for insurance protection for more than one person, as defined on the policy. By doing this, you can safeguard both individuals in the family that are wage earners so that both are protected financially if the other one should die. While this may not sound like something you want to think about, it should be something you consider because of the difficult financial strain your family may be in without you.
In all situations, it is essential to weigh the options you have in life insurance. Consider the costs, values and overall benefits of one type over the other. Talk with a trusted insurance agent to find out the costs of each types of these plans based on your individual circumstances. They should also be able to help you determine the best length for your life insurance policy. The benefit of knowing that your family is covered and cared for even if you are unable to provide them with the funds they need to do so, can help you to feel better about life moving forward. Carefully consider your options and do understand the term life insurance definition.