What is Term Life Insurance?
What is Term Life Insurance (TLI)? In short, term life insurance provides coverage for a set period of time, usually 10-30 years. If you die during the term of the policy, your beneficiaries will receive a death benefit. If you live to the end of the term, the policy will expire and you will not receive a death benefit.
Term life insurance is often more affordable than other types of life insurance, making it a popular choice for young adults and families on a budget. It can be a good option if you need life insurance but don’t have a lot of money to spend on premiums. However, it’s important to remember that term life insurance does not build cash value like whole-life insurance does, so you won’t be able to borrow against it or use it as collateral for a loan.
Types of Term Life Insurance Policies
There is level term and decreasing term.
A level term policy remains at the same death benefit amount for the entire term of the policy, regardless of how old you are when you die. This makes level term policies more expensive than decreasing term policies, but they can be a good choice if you want to ensure that your family will receive a certain amount of money no matter when you die.
A decreasing term policy starts with a high death benefit amount but decreases over time. The idea behind this type of policy is that your financial obligations decrease as you get older (e.g., your mortgage is paid off, your kids are out of college, etc.), so your need for life insurance decreases as well. Decreasing term policies are less expensive than level term policies because the death benefit goes down over time.
(TLI) can be a good choice if you need coverage but don’t have a lot of money to spend on premiums. It’s important to understand the different types of policies available and choose the one that best meets your needs. If you’re not sure which type of policy is right for you, talk to an experienced insurance agent who can help you make an informed decision.
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