Term Life Insurance Policy: What’s in Your Coverage?

When you have decided to buy a term life insurance policy, you are expected to pay a fixed payment for a particular term. When the term expires, there is no longer a guarantee to the premium rate. In this scenario, you have the option to look for a different coverage or pay for another term but at a higher rate. When you die during a term of coverage, your beneficiary will receive the death benefits. This type of insurance is the least costly means to purchase death benefits.

Nowadays, as the insurance industry becomes too busy, there are other types of insurance that are formed like whole life, universal and permanent life insurance. With these types, coverage is guaranteed for you at a fixed rate for the rest of your life. Compare to a term policy, these types of policies are more popular to estate planning and charitable giving. A term life insurance policy is used by people who wish to replace their earnings if they happen to die.

Majority of permanent policies create a predetermined cash value which occurs for the whole contract and you can withdraw some amount of money from these policies under certain conditions. There are policies that state that in order to obtain the money out of the policy, you should cash in the whole policy. Other policies; however, permit you to take out a portion of the money.

In terms of investments for your family’s future, life insurance is a great option. When you die unexpectedly, your family will be able to replace your income, pay off family debts such as mortgages or credit bills, plan for college education of your children and spend on daily expenses. Universal life, whole life and variable universal policies provide you the ability to create a cash value in addition to their offered death benefit. However, term life, may not be a good means to invest.