Term Insurance comes in handy when one has a family, debts or even mortgage plans. Unlike, Life Insurance, term Insurance has an expiry date set to it. It has to be renewed or canceled if the contract expires at any point. Insurance companies encourage individuals who have financial problems to get it since it is affordable to acquire it and so is it to maintain it. Despite its affordability, term insurance has a disadvantage, as it does not come with as it does not offer any tax benefits or cash value. What makes it different from other types of insurance is the term element as it lies between 10 -30 years. The terms also have a variance in the way premiums are paid. For example, premiums can; stay the same throughout the policy, decrease or increase. There are different types of term insurance hat one can choose from; level term insurance, annual renewable term life insurance, decreasing term life insurance and no medical term insurance.
Worth of Term Insurance
Term Insurance is a pocket-friendly type of insurance as the premiums paid are flexible depending on the type of life insurance. Also, the fact that term insurance makes it possible for one to acquire life insurance without necessarily going through medical checks, Medical checks, can be costly or rather other types of insurance cannot accept to give you the cover if, in the process, they establish that you have a chronic disease. This type of no medical checks is known as no medical checks term insurance policy. Its affordability allows one to pay up premiums at any time as long as at the end of the year the calculation of the premiums yearly adds up to the minimum amount that is supposed to be paid.
- Best on employees
Yes, those you have employed in the company also need to feel some sort of security in their life while working for you. This is only possible if the employer opts to get the group term life, as the whole life insurance cannot work in this particular type of situation. It is common in the workplace and does not have portability benefits. This type of term insurance is worth it since; it is affordable, it covers everyone and the possession remains to the employer. Insurance companies offer group insurance that includes mass mutual, Cigna, bright house financial and principal.
- Death Benefits
If the policyholder of the insurance dies, the immediate family becomes the immediate beneficiaries. Of which the money can be paid all of it then or during the course of their lives. Therefore, the immediate family can enjoy payment of children’s expenses, debt payment of hose rent payment just like any type of life insurance. Depending on the value of the insurance burial expenses or hospital, bills can be taken care of by the term insurance.
- Maturity benefits
Although not all term insurance has a maturity benefit, Return on Premiums is a type of term insurance, which makes this possible. Whereby, the insurance gives out maturity benefits in terms of returning the premiums. If only the individual during the time of taking the cover to the time the cover ends does not come across any form of financial insecurity that has to be insured. In other words, a return on premiums life insurance allows one to save up for whatever shortly and thus protection of your money.
- Mortgage protection
Payment of mortgage can be stressful especially if one is sick, dead or unemployed. That is now where term insurance comes into play. Through, Mortgage Payment Protection (MPPI) will only start paying off the mortgage 31 days or 60 days after the incident or accident, that makes it impossible for one to work anymore. The payments are only made on the borders on one’s income. If one’s mortgage is more than the income then one will have to take care of his /her on surplus, as the insurance cover is not responsible for that. Mortgage protection is only possible if one acquires term insurance and not whole life insurance.
Although term insurance is much cheaper as compared to whole life insurance, the cost has to be determined. The insurance cost has a variance depending on various reasons. Health, age, coverage amount, riders and time can be one of the variables that determine the cost of insurance.
The older one is the more expensive the premiums are ought to be paid. This also argues based on delaying to get the term insurance policy. For example, when one is young the premiums paid are ought to be the same throughout the year because the individual is still young, strong and in good health. However, when one delays and decides to acquire the cover when they are around 40 years or 50 years, payment will be around a 12% increase annually. So it is better to acquire term insurance earlier enough to prevent the extra costs.
Individuals who suffer from chronic diseases such as heart attack, high cholesterol, high blood pressure, nicotine use, drug abuse, HIV/AID and hepatitis. Before this, an insurance medical exam will be done; this is to provide any health information about you and your family’s medical history. Most Insurance companies also ask the doctors to report on one’s health status.
- TERM LENGTH
The longer the period of coverage of term insurance the more expensive. The reason being one is pushed to pay premiums for many more months and this makes the insurance cost relatively expensive. Of course, consultation has to be done in various insurance companies to determine the cost of the insurance policy. The cover ranges from 10 to 30 years.
This gives the rough amount of premiums that are to be paid monthly to obtain the insurance. As seen above there are different types of variables that determine the cost of insurance. The following steps represent how term insurance is calculated.
Give out personal information such as date of birth, income, marital status, number of children, gender and some habits or hobbies
Objectives according to the sum assured and the period one sets out. Also, establish how the beneficiaries will be able to acquire the money either one time or every month.
This is the final and the last step as the number of premiums set to be paid will be established. The individual will be able to choose from the different types of insurance suggested.
Term Insurance still stands out compared to whole life insurance. This is because of its affordability in terms of the insurance cost. Also because the term insurance calculator gives accurate or close to approximate the number of premiums as most of the variables are included during the calculation.
My name is Norman Frisky, I’m currently working as an editor at the Insurance Hotline. We offer Online Insurance, Term Insurance, and Online Term Insurance. Our mission is to build a secure future for our Members by providing best products and benefits.