What is Term Life insurance?

There are many different types of Life Insurance available to the consumers today. The most inexpensive of the different policies available is the term life insurance. The basic concept behind life insurance is that they named beneficiary of the policy, after the death of the insured gets a monetary benefit. The main times of policy available are variable life, whole life and term life insurance.  In a variable or a whole life policy a part of the premium goes into an investment fund whereas in a term life insurance no part of the premium is invested and the premium is paid for the insurance only.

Term Life Insurance provides coverage to the insured for a limited period of time at a fixed payment. After the expiry of the period, there is no guarantee given to the insured on the old rate of premium. During the tenure of the policy if the insured dies, the beneficiary of the policy gets the death benefit. The term life insurance works in the same way as all other insurances do. One gets the amount if the event is covered and the premiums have been paid as per schedule.

The term life insurance is a death benefit which helps the insured to provide for any financial problems which is dependants might face in case of his death. Many people choose term life insurance as this is less expensive than permanent life insurance. The simplest form that is available in term life insurance is that to cover for a year. In this case if the person dies in this year, the insurance company will pay the benefit to the beneficiary. But if the insured dies one day after the policy expires nothing will be paid to the insured. The premium that the insured has to be pay will be calculated as per the probability that is there of his dying in the policy year which is calculated keeping in mind certain factors.

Before the term insurance policy is renewed the insurance company asks for a proof of insurability. This depends on some changes that may have happened during the term like him contracting a terminal illness. The mortality table used by permanent insurance and term insurance is same and the cost of insurance depends on these. With the cost advantage to its side the term life insurance cover is preferred by many.

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