Term Life Insurance Basics

There are several basic points to know when you are thinking about life insurance. When you are trying to understand term life insurance, you want to be sure that you understand the basics of how this type of life insurance works. That way, you can be absolutely sure that you have chosen the right type of life insurance for you

Term life insurance is the original form of life insurance. It is considered to be a form of "pure" insurance. This means that the actual policy itself builds no cash value. Without cash value, the policy cannot be sold for money. The other types of life insurance, such as permanent life insurance, whole life, variable universal life, and universal life, are all different in that they do have a cash value and can be sold for money before the policy is cashed in.

Term life insurance provides exactly what it sounds like – life insurance for a limited period of time. The term is the period of time, and it is decided upon when a person purchases the life insurance policy. A person can choose to purchase a term life insurance policy for one of several terms – such as a year, ten years, or thirty years.

When the term is over, the person who has the insurance has a couple of choices. They can either drop the policy and find another life insurance policy, or they can continue to pay for the policy. However, if they continue to pay for their same policy, the annual premiums will increase each year. If they choose to pay these increasing premiums, they can continue to be covered at the same rate that they have always been covered.

If the person who has the insurance policy dies during the term, the death benefit will be paid on the insurance policy. The benefit is always going to be paid to the person who is named the beneficiary. The person who gets the money may choose how to use it, although most of the time it is used for paying final expenses, medical bills, and other bills that have built up. The money can also be used for things like education and taking care of finances of the family members that were left behind.

Term life insurance is also usually the most inexpensive form of life insurance because it has the biggest coverage amount per premium dollar spent on the policy. As long as the contracts are up to date, and the premiums have been paid to the company, the term life insurance will pay the death benefit to the beneficiary. Term life insurance is similar to other types of insurance, in that the premiums are not refunded, whether or not a claim is filed. The premiums that are paid are money that is used to secure the death benefit, should it be needed by the beneficiaries. Term life insurance is the oldest form of life insurance, and still remains one of the most popular forms of life insurance.