Term life insurance has emerged as the most popular type of life insurance today. Typical policies offer a death benefit for a set time in exchange for relatively modest premiums.
PROTECT YOUR LOVED ONES at a cost-effective price
Low premiums and easy-to-understand contracts make understanding the demand for term life insurance easy. Very often, people consider term life insurance during significant life events. Some examples include buying a home, getting married, starting a business, graduating from college or a trade school, or welcoming a new child into the family.
At the same time, dozens of life insurance companies compete for business with competitive premiums and optional features. Thus, you’ve made an excellent choice to visit The Insurance Hub for guidance from licensed professionals.
How Does Term Life Insurance Work?
Today’s life insurance companies may offer other features and variations. Applicants should compare policies and make sure they understand the pros and cons of one option over others. In its purest form, term life insurance provides:
For term, whole, or universal life policies, insurance companies may base their rates on the applicant’s health history, lifestyle, life expectancy, and current age. For instance, older people typically pay more than younger people for the same amount of coverage.
Term policies generally have level premiums, meaning they won’t increase as the insured person ages or if they develop a medical condition. Many insurers offer policies without requiring a physical exam. The applicant just needs to answer a few questions about their health history or lifestyle.
Is Term Life Better Than Whole or Universal Life Insurance?
Term costs less, which helps people afford enough coverage for their current needs. For instance, a growing family might buy a term life policy with a large-enough death benefit to pay off a mortgage, provide dependents with income, and build college funds.
Term life insurance policies generally expire with no remaining value because the premiums only cover the cost of insurance. When insurers underwrite term life, they use the information they gather to offer premiums and policies to people they expect to survive until the contract expires.
Thus, families that want to pass wealth on to the next generation or fund final expenses may want to consider buying whole or universal life, even though permanent policies cost more. Many compromise by purchasing both term and permanent insurance to ensure proper coverage as their requirements evolve.
For example, parents with a growing family and a new mortgage might choose to buy term life insurance to cover current needs. At the same time, they might lock in low rates for a smaller whole or universal life insurance policy to ensure they have lifetime protection and a growing asset.
Some insurers let policyholders convert the term policy into a permanent policy, like whole life insurance, before it expires. Some insurers also offer a return of capital rider that will refund premiums if the insured person survives. These options could cost a little more than straight term life, but they may offer more value and flexibility.
How to Buy Term Life Insurance?
Insurance companies use similar underwriting factors but determine risk and set premiums slightly differently. For the same death benefit and policy, applicants will generally find that various insurers offer them different rates.
For instance, some insurers may accept applicants with a specific health condition for which another company would decline or increase premiums. In contrast, another insurer may offer cheaper premiums for applicants in excellent health than another.
Contact The Insurance Hub for guidance about the best life insurance options and competitive premiums. The experienced professionals will understand your unique situation, offer well-considered solutions, and help shop the market for the best prices.