Welcome back to my blog my friends.
In this post I would like to educate you about Term Life Insurance. I don't know what kind of knowledge you have about Term Life Insurance and whether you are new or have some basic knowledge about Term Life Insurance, after you have read this post you will be very confident about the knowledge you gained on Term Life Insurance and you will able to teach this Term Life Insurance information to another person without any hesitation. Most importantly, you will also be able apply this Term Life Insurance knowledge for your personal insurance needs.
Term Life Insurance was the first Life Insurance was invented -before all of the other types of of Life Insurance. Term Life Insurance provides temporary protection and it is the lowest cost of all types of Life Insurance. Term Life Insurance does not accumulate cash value and its policy remains in force for a specified period of time, after which coverage terminates. Term Life Insurance provides a benefit only if the insured dies during the period of coverage.
There are three different types of Term Life insurance. 1). Annually Renewable Term Life Insurance sets the term of coverage as one year. Each year, the policyowner (the person who owns the policy) may renew the policy without having to provide evidence of insurability. However, the premiums are subject to increase upon renewal. 2). Level Premium Term Life Insurance sets the term of coverage for 5 years, 10 years, 20 years, 30 years & 40 years. The premium remains level during the initial term of coverage. When the initial term ends, the policy may renewed without having to provide evidence of insurability. However, the premiums (monthly payments) are subject to increase upon renewal. 3). Decreasing Term Life Insurance sets the premium (monthly payments) level during the term of coverage, but the death benefit decreases with time. Typically, the death benefit decreases to zero dollar when the policy reaches its last year of term. Decreasing Term Life Insurance may also be called Mortgage Protection Insurance or Credit Life Insurance.
Decreasing Term Life Insurance is designed to lower the cost of premium (monthly payments) and for this reason, its main purpose is to purchase it to protect the loan of a mortgage. Ideally, when purchase Decreasing Term Life Insurance to protect a mortgage loan is to purchase the death benefit amount equal to the mortgage loan amount. When mortgage loan is paid down, the Term Life Insurance benefit of the policy decreases accordingly to the paid down mortgage loan amount. Once the mortgage is paid off, the Decreasing Term Life Insurance death benefit is also decreased to zero. Since the death benefit is designed to decrease, the premium (monthly payments) is also very low.
When Decreasing Term Life Insurance is purchased as Credit Life Insurance is to protect against a loan such as an automobile loan. If in the event the owner of the automobile is unable to pay for the loan the Credit Life Insurance policy pays the loan off for him or her.
I hope this Term Life Insurance post has been a valuable information for your insurance education as well as for your personal insurance needs. Please stay tune for Whole Life Insurance in my next post.