20 Year Term Life Insurance Explained

Learn How 20 Year Term Insurance Works

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The 20 year term life insurance policy is probably the most loved and most bought term life insurance policy. The reasons for this are pretty obvious. Let us look at what this policy is all about then discuss how it is applied to the needs of the people who buy it.

• The Policy

  This policy has a level death benefit for 20 years. If you should own such a policy and die within the 20 year period the full face amount will be paid to your beneficiary either in one lump sum or in the form of a monthly income, whichever you choose.

  The premiums are also level throughout. They never increase neither do they decrease. In most cases this policy can be converted to permanent life insurance within a specific number of years without evidence of insurability. The conversion period may be limited to 12 years for example.

• How To Use Policy

  You can use the 20 year term policy to protect your family in the event of your premature death. You can use it to protect a spouse who is dependent on you as well. In fact, if you have anyone dependent on you the 20 year policy can provide protection for them.

  If you have a business partnership or a corporation you can use this policy to fund a buy sell agreement that will guarantee the continuation of the business in the event of the death of one of the partners or shareholders.

  The proceeds are usually paid to the partnership or corporation and is used to buy out the survivors shares as per an agreement legally set up beforehand.

  This policy is also sometimes used for key employee life insurance. The business buys a policy on a valuable employee. If this key employee should die the business uses the funds to tide them over while they search for a replacement for this employee.