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Term Life Insurance - Worth a Thought: Loan Insurance US

Monday, June 30, 2014

Term Life Insurance: Don't Rush to Buy

When did you fall sick last, requiring you to see a doctor and have a few tests? Before you could heave a sigh of relief and say gratefully, “Thank God, I am safe! ” you must have noticed you have gone through a world of worries. Those worries had both centers and sub-centers, each dominating reciprocally the other. 

You were primarily worried about your health and then at the sub-center there were your 27 years old sweet homemaker wife Jane and 7 years old daughter Susie. Your worries made years of hours. Your worries lost themselves out to each other, each looming larger than the other. You kept yourself asking: What will happen to Susie and Jane after me? You kept yourself questioning: What have I done all these years?  

Life is like that. Maybe, you could not manage a savings check till today. And you worry what if anything befalls soon! You cannot get a million dollars in a year or two, can you? Then you remember Jacob, your friend in the insurance company. You just shrugged off his advice for a term life policy months ago. Maybe it is time you call him back. 

Don’t just hare it!

It is not that your Jacob is the last hope for you. So talk tea to him. Don’t rush to say, “Hey Jacob, sorry I refused you. Get me a life insurance policy opened.” By saying so you make four mistakes.

One) You forget you leave it for Jacob to decide for Susie and Jane.

Two) You remain in the darkness as regards what you do or Susie or Jane benefits.

Three) You again do not give a fig care to your hard-earned money.

Four) You are not aware that Jacob will have a pocketful for your policy.

So what should you do? – Deal with Jacob the insurer, not Jacob the friend. (No doubt friends are the best gems of life, though. Surely, Jacob will not do you any harm. But you should know what you do. ) Ask for his guidance both as a friend and insurer. Better, you have some knowledge before you buy what Jacob sells. If you are for a term life (if your life situation is like above, it is for you), you should have some basic knowledge about it. 

Here are the answers to the questions you should know about term lifeinsurance:

What is a term insurance policy?
You fear that your spouse, son or daughter’s future will be vulnerable in case of your leaving them at your current situation. You calculate that they could be safe if a certain period of time is gone. (For example, your son will have completed his education in 15 years.) That is to say you fear of a vulnerable period for your cared ones. You estimate that they could survive without you if they could get a certain amount of money should anything occur to you within that time. Now you look for an insurance policy that suits you.  The policy you need is a term policy. Usually term life insurance covers from one single year to 30 years in the most. Some companies are also offering customized term coverage.

What are its types?
Term life insurance has two types: level and renewable. With the level, your premiums remain unchanged during the whole term. If it is $60 a month, it will remain so till the end of the term. But with renewable it changes every year. The change is, of course, toward the increase point.

What do they mean when they say they offer guaranteed benefits for their term policy? 
You should not be carried away by advertisements. The benefits are to be validated. Guarantees work only when they get validated as par the contract made between you and your insurer. 

What is a rider? 
A rider is an add-on or extension to a policy. It may be metaphorically said that it is like getting an extra tyre to your newly bought Sedan. However, there is a difference. When Sedan offers it for free, your policy does not do so. It sells it to you as a product. So a rider is an add-on to an original insurance plan. Insurers offer different riders for their customers to choose from according to their requirement.
It is optional for you to accept a rider or refuse it.

What are the usual riders?

Riders vary with products and companies. However, the following ones are the commonest:

a) Death Benefit Rider

b) Accident Benefit Rider

c) Permanent Disability Rider

d) Terminal Illness Rider

e) Renewal Provision Rider

f) Spousal Insurance Rider

g) Child  Rider

h) Premium Waiver Rider

i) Income Benefit Rider

What does term insurance cover? 
Despite the generally popular notion that term insurance covers only death, insurance companies are offering:
a) Mortgage coverage
b) Education coverage
c) Supplemental income coverage

How much do my beneficiaries get if I die within the term?

Insurance company ads claim that they give the beneficiaries the full amount you insured them for. This is only the part truth. The fact is that to get them the full amount you have to pay premiums up to a certain time regularly and in time. Also your death must meet the conditions referred to in your policy. Certain causes are accepted and certain causes are not. For example, in case of your committing suicide, the beneficiaries will get nothing.

Why is it said that term life has no cash value?
Your insurance company does not owe anything to you if you die beyond the term or fail to meet the criteria or terms and conditions of the policy. Once your term is over with you living, you or nominee get nothing. This is why term life is a no cash value policy.

What are the pros and cons of term life insurance?
Check out the list:

a) Safeguards your dear ones. 
b) As low as $15 premiums. (However, this depends on several factors like your age, insurance coverage, tobacco habit, health conditions etc.)

c) Customized plans.

d) Affordable even in tightest budgets.

e) Switchable to permanent or whole life insurance (not always, though)


a) No cash value

b) Certain health conditions prevent you from getting the policy.

c) Specific term can only be converted to permanent life insurance upon certain conditions.

How should I know if I need term life insurance or not?

 You should consider term life insurance if:

a) You have been a poor saver.

b) Your son/daughter/wife will be in financial trouble in your absence (If you have a family.)

What is your advice for term life insurance?

Insurance agents are smart people. They come to you well-equipped. So it is easy for you to get easily motivated to rush for the policy they suggest. I would suggest the following tips for you:
a) Make sure you shop enough around and have the highest coverage for the lowest premiums
b) Make sure you can convert your policy from term to perm
c) Make sure your policy has add-ons.

d) Make sure they have the right add-on for you

e) Make sure you have read between the lines of the terms and conditions
f) Make sure that the company you insure with is well-established
g) Make sure you have read and understood all the terms the company uses in the policy papers.

h) Different companies sell the same product in different names. They differ only on certain points. It is always good to understand them. 

Image Credit Goes To:cheapertermlifeinsurance.com

Recommended Reading: Whole Life Insurance- Types, Pros and Cons

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