Before you get a term life insurance quote it is important to
have some understanding of how term life insurance really works.
If you know exactly what type you want and how it works feel free to go ahead and get your term life insurance quotes from a few of the finest companies in the life insurance industry.
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Term life insurance, as the name implies, is temporary Insurance. If you want life insurance for a relatively short period of time, then term life insurance is for you. You can get a term life insurance quotes and buy a policy for a specific period of time such as 1 year, 5 years, 10 years, 15 years, 20 years, 25 years or 30 years.
If the insured dies within these time spans the beneficiary (wife, husband, children, bank, business partner or corporation) will receive the face amount of the policy...otherwise referred to as the death benefit. You receive no cash value from term life insurance. You will see what I mean when you review your term life insurance quote.
Term life insurance protection is pure life insurance and usually costs less than permanent insurance. ...permanent life insurance has cash values. Term life insurance can be used to cover a young family in the event of the premature death of a family's breadwinner.
The insurance company can pay the proceeds of your policy in one lump sum or in the form of a monthly income.
Term life insurance can be used to pay off the balance of a mortgage upon the death of the insured.
Term insurance is also used by business people to cover outstanding loans with their bank, to purchase a deceased partners shares , if they had an agreement to do so. This agreement is known as a "buy sell agreement". This agreement is usually drawn up before the partner dies and is binding. It is also used for key employee insurance. You know, if you have an employee who is so valuable that if he or she were not there any more it would put your company through some hardship. It is advisable that business people examine term life insurance quotes initially...as term policies are less expensive.
Term accumulates no cash values. When you buy term you are buying death benefit...as your term life insurance quotes will show. In other words the face amount of the policy will be paid to your beneficiary upon your death.
Some term policies, however, have a return of premium benefit at the end of the period for which you bought it. Your annual cash outlay for this type of policy is usually more than you would pay for regular term life insurance for the same period of time...but you get back all you have paid if you did not die within that specified period.
Most term insurance policies can be converted to a permanent life insurance policy within a specific period of years. Upon conversion your premium outlay will be more than the amount you had been paying for the term policy. You might ask...why would I want to convert my policy to one that will cost more?
The fact is it does not really cost more because the cash value built up over the years in a permanent life insurance policy is usually sufficient to offset the additional outlay. So, you do put out more cash each year for permanent life insurance, but you can cash in your policy for it's cash value at any time, take a loan from the policy, or use the dividends earned by the policy to reduce your premiums. Dividends are not guaranteed.
If money is tight it may be a wise decision to start off with a term life insurance quote and buy a term policy with an option to convert, to a permanent policy, at a later date. For example...
Let us assume you purchase a 20 year level term policy, which, incidentally, is a very popular policy. At year 15, God forbid, you discover that you have become terminally ill and you don't know how many years you have left. You may have another 5, 10, or 15 years. If you should die after 5 years, that is after your 20 year term ends, there would be no death benefit payable to your dependents...
You, however, have the option at or before year 15 to convert to a permanent policy, without any evidence of insure-ability, that is no medical, even if you are terminally ill. If you died 6 years in the future, or even later than that, the full face amount of the policy will be paid to your beneficiary, plus any dividends or paid up additions accumulated up to that time. Paid up additions are small single premium whole life policies which add additional value to your policy.
The only problem with this is that the new policy would be purchased at attained age, and the annual outlay would be more than had you bought the policy at the time you purchased the original policy.
I hope this explanation helps you make your decision. Your next step should be to examine term life insurance quotes from several different high level companies.
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I recently did some research on the development of the 30 year term insurance policy over the years. What I learned was quite interesting.
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