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Get the Facts Before You Purchase Coverage

Get the facts about term life here. We'll explain what it is, how it works, and what its benefits are.

Basics to Consider

Term life insurance provides protection for a limited time period, or term. This is usually regarded as the simplest, most straightforward type of plan. They are intended to offer life insurance protection for those on limited budgets. When you get a price estimate, you will see that you can purchase a fairly large amount of insurance protection for relatively small premiums. This makes temporary coverage ideal for short-term goals, such as extra life insurance protection while you pay off a loan or raise young children. You can usually get quotes on policies with lengths of 5, 10, 20, or 30 years. After the period expires, you can renew the policy for a higher premium.

Features

Below is a summary of the main features of a policy:

  • Very affordable in the short run.
  • Fluctuating premiums. Most insurers reserve the right to raise or lower your premiums at any point in the plan. Your premiums might change due to projected changes in investment earnings, expenses, or mortality experience. The insurance company can never raise your premiums above the maximum specified in your policy, though.
  • Renewable. Most policies allow you to renew coverage once the original term expires. If you decide to get a term life insurance quote, keep in mind that, each time your agreement is renewed, your premiums will increase to correspond with your advanced age at the time of renewal. In other words, this coverage becomes less and less affordable as you get older.
  • Convertibility. If you get a quote on a plan with a conversion option, this means that you will be able to exchange the policy for permanent life insurance coverage at any time. Most providers give you this option until you reach a certain age (e.g., 75).

Understanding the Ins and Outs of Coverage

When you get pricing estimates, you will be getting an idea of the premium you will pay for temporary life insurance coverage. If you die while the plan is in force, your beneficiaries will receive the proceeds of the policy. If you are still alive when the contract expires, your coverage will cease unless you choose to renew it at higher premiums. This means that, unless you renew, you will no longer have protection once your period is over. Remember when you are getting quotes on term life insurance that this kind of policy does not have any cash value, so the agreement is only worth something if you die while it is in effect.

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