Term Life Insurance Facts – Look before You Leap

Term life insurance does not evoke the kind of response that other insurance policies do. According to several financial institutions, people who come to them for life insurance are not convinced about buying term policies. Those who do buy only make a half hearted purchase. There is a need to make people aware of some term life insurance factsbecause in reality, this policy is very beneficial in many ways.

A lot of people let term insurance pass because they do not get benefits from it during their lifetime. Also called the death benefit plan, this policy is useful only after the death of the beneficiary. While this is true, you cannot begrudge the fact that this insurance policy provides great support to the family of the deceased and keeps them financially comfortable. Added to this benefit are many more that emphasize the importance of knowing a few term life insurance facts.

Term life policies are some of the cheapest policies that you’ll ever find

A lot of people are aware of this fact. In fact, this is one of the main reasons that tips the balance in favor of this policy. Most of the term life policies cost just 10 percent of whole life cover. In the long run, a term policy turns out to be very economical, despite predominantly being a death benefit.

Simplicity and flexibility are facts of term life insurance

For people who don’t like to be fussed about the complexities of life insurance, term life policies are the best option. You also have the flexibility to choose the term. Some policies are available for as little as five years while others are thirty years. You only pay the premiums on a monthly basis. There are no other complexities attached to the policy.

The one thing that you need to keep in mind is that premiums for term insurance increase with your age. So, if you purchase a 30 year policy, you will be paying much higher premiums at the end of the term when compared to the initial period. Despite this increase, the cumulative cost is lower than that of whole life insurance.

Use the money you save for better purposes

Term insurance is cheap. Whatever term you choose, you save more money when compared to other kinds of life covers. So collect the money you save and put it to good use. You can invest the money for high returns, set up a savings fund with a financial institution that offers a high rate of interest or invest in a robust IRA where you get tax benefits. Term life policy gives you the freedom to invest your money on your own.

You don’t have to compromise on coverage

Since the policy is so cheap you can opt for more coverage. This can be extremely useful when your children are still studying or if your spouse does not have an income. In case of your death, the education of your children is not affected and your spouse can have some sustenance.

There is a downside to these policies.You do not receive good value for money at the end of the term. But then life insurance is not meant to earn high dividends. It is meant to protect your family in case of your death and term policy does that while still giving you enough freedom to invest your money as you wish.

SG-642-60-11/29/2012