If you have been comparing life insurance rates then chances are good that you have looked at term life insurance. Term life insurance is a terrific product for people who:
- Need a high dollar death benefit with a low dollar premium.
- Need a temporarily high amount of life insurance death benefit.
- Need a gradually decreasing amount of life insurance.
- Need a simple, small burial policy.
Understanding Term Life Insurance
Term life insurance is a policy that offers the policyholder a death benefit for a limited period of time, generally anywhere from 5 to 30 years. Term life insurance rates are based on the actual cost of insurance alone and not on accumulating cash values (as they are in whole or permanent life insurance policies). This makes rates much cheaper. In addition, because the insurance company is only obligated to offer you insurance protection for a limited period of time, they have less risk of you actually dying during the term of the policy and can offer lower rates based on that reduced risk.
Uses of Term Life Insurance
As we mentioned above, term life insurance is the perfect product for many different situations.
- Because it has a low premium, it can offer affordable, high-dollar protection.
- Because it is issued for a set period of time, it offers a great resource for temporary protection.
- Term life insurance policies can have decreasing death benefits which can reduce the protection over time-mimicking the reduction in your bills as you pay off debt.
- Term life insurance is simple to understand since there are no complex cash value accumulation figures, and is a great product for small burial policies.
Comparing Life Insurance Rates
A term life insurance policy should be considered when you understand the ramifications of buying a term policy. Remember that you are paying for only a temporary insurance coverage and that, as your health changes and you age, getting new coverage can be expensive or impossible once your term policy ends.
Remember, the comparison of life insurance rates isn't just about price. It should be about the coverage offered, the conditions of the policy and the way in which it fits in with your lifestyle, health and needs. After all, if a life insurance policy has cheap rates but doesn't give you the kind of coverage that you need, then it can hardly be considered a good deal.