Term Life insurance is the most common type of life insurance policy written today. It is very unlike most of the other types of life insurance policies that are available. There are many reasons to purchase term insurance over any other life insurance policy. There are also many reasons, depending on circumstance, why term insurance may not be the right type of life insurance to buy.
Term Life Insurance is The Least Expensive Policy
One of the reasons why term insurance is so popular is because it is the least expensive type of life insurance policy. The difference in price can be extreme. Many whole life insurance policies can be as high as 10 – 20 times the cost of a term policy.
Term Life Insurance is Good For One Thing: Death Benefit
A term policy is unlike other life policies and more closely resembles other types of insurance, like health and auto insurance. A health insurance policy provides one benefit; supplies the insured with medical benefits if he gets injured. Term insurance is very similar to this. It will provide compensation to the beneficiary (the person who will receive the money) in the event that the policyholder dies. This is unlike other life insurance policies. Most life insurance policies come with some sort of investment vehicle or cash value option. Many life insurance policies are also great for estate planning. A term policy has none of the above-mentioned benefits. If the insured does not die within the agreed upon term, the policy ends. The insured does not get that money back or have any access to it.
Term Life Insurance Has An Expiration Date
The term can be defined as the amount of time until the insurance policy expires. Terms can range from as little as 5 years to as many as 20 years and even more. After the term is completed, the insurance policy is rendered null and void. This is the main reason why term policies are much less expensive. A non-term insurance policy can stay with a person until death, as long as he or she continues to pay premiums. A term policy, however, has an expiration date, and thus the likelihood of the policyholder dying within the specified time frame is much smaller.