Term life insurance or term insurance is life insurance, which provides coverage for a specified period of time, typically the entire life of the insured. This form of insurance is normally called “term”, since it lasts for only a specified period. There are two basic types of term insurance policies. These are “non-cumulative” and “cancellation” term insurance policies. Most individuals purchase both types of life insurance to provide coverage in the event of their deaths. Here are some important things to know about term insurance.
Term insurance is a good option to protect your family’s financial interests in the event of your death. A good health insurance policy provides financial protection for dependents who are left with an unplanned financial burden after you die. However, there is no assurance that your dependents will still have enough income to meet their basic needs and requirements after your death. A good life insurance policy provides coverage for dependents during the period immediately following the end of your coverage. This means that if you die during this period, your dependents receive the full amount of your coverage.
Guaranteed death benefits are one of the most basic features of any term life insurance policy. This feature allows the policyholder to create a cash value that accumulates while your coverage remains in effect. This cash value is tax-free and may be used as a financial resource during your lifetime. In some policies, a portion of the guaranteed death benefit may also be paid to the beneficiary or beneficiaries.
The premiums that are charged on term health insurance provides coverage to a specific age range. Most health insurance provides coverage for people over fifty years old and older. Occasionally, however, health insurance provides coverage to younger people. If you are in this age range, your premium may be determined by your health at the time of application. If you have ever had a stroke or heart attack, your premium may be significantly higher than if you are younger.
Guaranteed or minimum guaranteed payment provisions are included in all term plans. Most life insurance companies allow you to choose between a standard savings component and an increased savings component. This additional savings component is referred to as the “put option.”
Most life insurance policies provide coverage for the policyholder’s dependent children. If a policyholder dies, his or her dependents are granted lifetime protection under the life insurance policy. Typically, this type of policy provides a level term and a converted basis for savings purposes. convertible life policies provide the death benefit in both level and convertible terms, so that the same financial resource (the converted basis) can be used to pay the death benefit and the premiums.
Some health insurance policy holders choose to purchase supplemental insurance. Supplemental insurance policies are generally available only to those who have exhausted their own individual health insurance policy benefits. Today, there are many life insurance companies that offer this type of insurance.
Many people are unaware that term life insurance policies contain a number of rider options that can provide significant tax savings. These options include flexible riders such as the age rider or the wellness rider. The age rider allows the insurance provider to adjust the premiums and/or the benefit amount in light of the fact that most people will reach a certain age. In many instances, the insurance provider will reduce the benefit amount as the insured becomes older. For this reason, it may be more affordable for an older person to maintain an insurance policy rather than purchasing a supplemental policy. Another benefit of the wellness rider is that it provides tax savings for those who invest in a health savings account (HSA).