TERM INSURANCE

Term Insurance — What Is It And Who Needs It?

Term insurance refers to a special type of life insurance policy that gives coverage for a predefined period or term (hence the name). Benefits cannot be paid to the insured person but to named beneficiaries. And even at that, it is only if the insured person passes on within the covered period (A day later and no benefits will be paid).

This form of life insurance protection is more affordable when compared with other forms like permanent life, variable life, etc. But unlike those other types, it does NOT have any cash value attached to it. In other words, it is pure insurance. That is, something has to happen for a pay out to be made (in this case, the death of the insured person).

This policy type comes with a lot of variants or terms. The most popular are 10, 20 and 30 year terms. Some offer policy holders the option of converting to permanent life insurance and some don’t.

A summary of features includes:

1. It provides coverage for a specified term only.

2. It does NOT build equity. That is, an insured person cannot get cash value from it like is possible with permanent life.

3. Benefits are only paid out if the insured passes on.

Who Needs Term Insurance?

This policy type is very useful for a lot of different purposes. Here are some examples…

1. To Ensure The Payment Of Mortgage

What happens if a bread winner passes on while a substantial part of the family’s mortgage is still outstanding? People buy a form of term life policy to ensure that their loved ones don’t have to contend with the challenge of mortgage repayments.

2. To Ensure A Family’s Quality Of Life

What would happen if a spouse passes on (especially a bread winner)? Then the family would be compelled to live a lower quality of life. However, this won’t be the case if the deceased had a term life policy. The benefit paid out would help the surviving spouse cater for the kids without having to make drastic adjustments. Request a term insurance quotes.

3. To Secure The Quality Of Education Kids Enjoy

A parent’s death can alter the course of a kid’s life. This affects every area but one of the most hit areas is the quality of higher education such a kid is able to enjoy. A parent can ensure that their plan for their children’s higher education isn’t altered by their demise. They can do this by getting an appropriate term insurance policy.

4. To Secure A Business

Businesses also buy term insurance policies to protect themselves from the shock that the demise of a partner or valuable employee could cause them. For example, the surviving partner could be named as the beneficiary in the policy in order to ensure that they have enough cash to buy up the other partner’s stake in the business. This will give the partners the peace of mind that nothing will derail the business from their founding principles among other things if any of them passes on.

5. To Protect The Family Of Child Stars

There are children who earn substantial revenue due to their rare talents (child actors, singers, etc). The families of such kids would experience a downturn in their finances if such a child should pass on. A term insurance policy can be purchased to protect such a family from the hardship they may be exposed to if such a child passes on.