Nobody knows when he/she is going to die; your future might seem insecure financially. Financial planning is very important. So, life insurance can be of great help for you and your family’s future.
If you need a low cost life insurance, you can get a term life insurance or term assurance because the premium costs are substantially lower than those for permanent life insurance. Unlike term insurance permanent programs have built in cash values which make the program many times more expensive. Therefore, insurers are inventing new strategies which are tailor made according to the needs of an individual.
This type of insurance is usually for one, five or ten years. It may sound simple but there are some loopholes and complexities which need to be filled. During the term you pay a specified premium and your beneficiaries, will receive a death benefit if you die during the term of the policy. So, term policies provide only the death benefits, if you die within the term of the policy you win and if you live past the term, you will not get your money back.
Annual renewable term is the simplest form, where the term is only for a year. Purchase of this type of insurance is very low because the likelihood of dying within a year is very low.
One of the drawbacks of renewal for this type of policy is the insurability proof requirement . For example, if the insured has a serious illness and does not really die until the expiry of the term, he would be considered un-insurable because of the serious illness after the term expires and, would not be able to renew or buy a new policy.
This type of policy can be continued for some course of time even though the premium is paid for one year of coverage. The period varies from 10 to 30 years. The premium increases with each renewal period thereby making it more expensive than the permanent policy.
Level term insurance is more common. For instance if you want a basic 10 or 15 year low cost term insurance where you want the death benefits to stay the same throughout the term and you can convert it to a different term policy such as a cash value policy. The term can range for 10, 15, 20, or 30 years.
Term assurance is for people who want to protect the beneficiaries and who –
Choose your insurance plan thoughtfully based on your requirements. Do not make hasty decisions while buying a policy because it is for assuring yours and your family’s future. A wrong insurance plan can damage your financial plans more than any other financial product today.
The last thing you want is to be a burden to someone else and this is the reason you should prefer to take a term life insurance, as the insurance money is used to fulfil your own needs which may arise during your lifetime or after that.