How Does Term Life Insurance Work
September 15, 2022
You are looking for a solid life insurance plan and want to know how term life insurance works before making a decision. Before deciding whether to invest in term or whole life insurance, review the options. A whole life policy is the better bet if you want a policy that will accumulate cash value over time. If you prefer a simple, straightforward policy, a term life policy may offer the right coverage. It is just one of many reasons term life insurance is an attractive option, but despite its popularity, many people don’t understand how this type of policy works.
Term Life Insurance: What You Need to Know
When looking for a life insurance policy, you should know the following facts about term life coverage.
You Choose the Coverage You Want
Term life insurance is a policy that grants coverage for a specific period of time. One of the best features of a term life policy is choosing a level of coverage. Indeed, you can choose the length of your policy, and you can even invest in multiple policies of differing lengths. The shortest term life policy varies by insurer and is usually ten years; the most extended term for life insurance is typically 30 years.
Premium Is Calculated Based on Information
Once you’ve decided the length of coverage that’s best for you, your insurer will calculate a premium based on uniquely identifying information. You will need to answer questions about your health, and basic demographic data, such as age and gender. You may also be required to offer additional details such as your hobbies, driving record, family history, and whether you use drugs or alcohol.
Medical Questionnaire or Exam May Be Required
Because a term life policy kicks in based on the liability of your death, an insurer will need in-depth information about your health and well-being. They will require a medical questionnaire, maybe a medical examination depending on your health, age and the amount of coverage requested..
Beneficiaries Receive Death Benefit
The most important part of a term life insurance policy — the death benefit — will be issued if you pass away within the period specified by your coverage. In this event, your beneficiaries will receive the payment — usually in a lump sum — and it usually is not subject to taxes. Because the death benefit is the only value of a term life policy, this makes it an excellent choice for anybody who supports a young family.
About 1891 Financial Life
At 1891 Financial Life we don’t just sell policies, we offer possibilities. We pride ourselves on giving back to the communities that we serve by providing quality and comprehensive insurance solutions. We are a not-for-profit life insurance Society, which means the sales from these financial service products help fund member benefits along with social, educational, and volunteer programs designed to respond to community needs.
Our portfolio is extensive, ranging from various life insurance policies to our annuities to support your financial needs no matter what stage of life you’re in.