Explanation Of Term Life Insurance

Reasons You Would Buy Term Life Insurance

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Here is a short explanation of term life insurance. I will try to give you the type of information that most people asked me when I was in the field seeing people face to face.

• What is Term Life Insurance?

  As it's name implies term insurance provides life insurance for a specific term, a specific period of time. At your death the life insurance company agrees to pay your beneficiary the face amount of the policy in one lump sum or if you choose in the form of an income.

  You are required to pay a premium for this policy. The payments can be made once per month, once each quarter, once every six months or once per year.

  Term policies can be purchased for 5 years, 10 years, 15 years, 20 years, 25 years or 30 years. Some policies go to certain ages, term life to age 65, term life to age 80 or term life to age 90.

  Your premium is usually level, it never increases. In some cases your premium is level for 5 years at which point it increases and some policies have an increase in premium every 5 years. Some policies have a premium increase every 10 years.

  The policies with the increasing premium are usually those which last a long time, up until age 65 or age 80 or 90 for example.

• Why Buy Term Life Insurance

  You buy term policies for family protection. If you die you want your family to be able to live on even if you are not there. You also buy term life insurance to guarantee that a business can continue on after the death of a business partner or shareholder.

  You use a buy sell agreement drawn up before death and funded by life insurance to guarantee business continuation. Term insurance is the cheapest way to fund this agreement.

  You can buy a term policy on the life of a key employee, again to guarantee that this business continues even if the key person dies.

The best explanation of term life insurance you can get is the policy itself. Sadly most people don't read it until the insured dies. Please take the time to understand what you have.

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