Term Life Insurance -- A Definition, Pros, Cons And 9 Ways To Pay Far LessDo you want to know what a term life insurance policy is; its advantages, disadvantages and adjustments that can make you get the most out of it? Then read on...
It is an insurance policy type that pays out benefits only when an insured dies. Here are its main characteristics...
1. This policy provides coverage for a specified term only. If, for example, you buy a five year term life policy, you'll NOT have any form of coverage a day after those five years unless you renew your policy.
2. It only pays out a benefit if the insured dies within the term of the policy. If the insured dies a minute after the expiration of the policy, such an insured's beneficiaries will NOT get a dime.
3. It does NOT build equity like other forms of life insurance. NO cash value is built; no investment opportunities are available.
It's main advantage is that it gives you the most coverage per dollar than any other life insurance policy type.
If you're financially pressed, you can buy substantial coverage for little outlay. Typical uses will be for a young family that has outstanding mortgages and a not-so-big income.
If done right, this policy type will help the bread winner ensure that the family will both be able to pay off their mortgage, maintain the quality of life they are used to and much more. To learn more on how to calculate what amount is right for you, read this article: Life Insurance -- Deciding How Much Coverage You Need...
However, term life insurance is NOT without its disadvantages. But good a thing, you can cancel the effects of those with a few tips...
1. The fact that it does NOT build equity is one of its most touted disadvantages. But does your auto insurance policy build equity?
What it gives you is pure insurance. If nothing happens -- All good and well. If the worst happens, your loved ones are covered.
And if you're really concerned about the equity stuff, you can buy a policy with a convertibility feature. With this you can easily switch to whole life insurance when you are more financially buoyant -- That's enjoying the best of both worlds.
2. An insured runs the risk of being uninsurable at the expiration of the current term. If this happens, such a person will NOT be able to get any form of life insurance.
But that really can be dealt with if you buy a term life policy with a guaranteed renewal feature. This guarantees that you will be entitled to renew your policy without the need for a medical exam.
Now that you have some background information on term life insurance, here are things you can do to get yours at the best rate possible...
1. Buy while you're young. The sooner you buy, the cheaper your rates will be. This is because younger people are expected to live longer.
2. Quit smoking. Smokers' rates are at least twice that of non-smokers.
3. Get in shape. Being overweight will add much to your term life insurance rate.
4. Quit any job that exposes you to hazards. The more hazards you're exposed to at your place of work, the more you'll pay for this policy.
5. Quit dangerous sports like skydiving.
6. You'll get a multi-policy discount if you buy more than one policy from the same insurance carrier.
7. Pay annually. Don't pay monthly.
8. Pay by EFT (Electronic Fund Transfer). This authorizes your insurer to deduct your premiums automatically from your account once due. This will get you some savings.
9. Do extensive comparison shopping. Get and compare quotes from a wide range of insurers. You could easily save up to a thousand dollars by doing this depending on your profile.
Start getting and comparing quotes. The box below is a good place to start. It's free and will take you just a few minutes...