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What Is Term Life Insurance?

Life insurance is very important, however many people worry that it the monthly premiums are beyond their budget. Term life insurance offers an affordable option.

Like all life insurance policies, term life insurance endows any surviving family members with an amount of money after the insurance member has passed away. Parents, for example, may want to make sure that their kids are “taken cared of” if something happens to them. Generally the amount of money depends on the premiums paid.

In a traditional life insurance policy such as whole life insurance or variable life insurance, part of the premiums are placed in an investment fund. So, the premiums are kept at a constant, regardless of inflation, because the additional fees are taken from the investment earnings.

In term life insurance, on the other hand, the premiums increase with the years. For example, if a man gets term life insurance at $300 a year. Thirty years later, his premiums may be $12,000.00 per year. So while it is “cheaper” at the onset it can be more expensive in the long run. However, for people who are in an economic pinch, it is better than having no insurance at all.

To qualify for term life insurance a person must first have a basic physical exam. This is because insurance companies will screen a person for any conditions or diseases. Sometimes, they will charge a higher premium for people who are considered “high risk” for particular conditions. People who are older are also more likely to get higher premiums.

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