Many of you have term life policies offered to you through your jobs, but what does that mean and how does that work?
Life term insurance comes in form of a contract between an insurer and an insurance company. It is a type of life insurance that lasts for a specific period known as a term before expiring. If you die before your time is up, your beneficiary (usually your family) receives a death benefit as a tax-lump sum of money. It offers affordable, straightforward protection that lasts a defined period of time. it is often the lowest-priced coverage option. It is designed to help replace your income if you pass away during your earning years.
TYPES OF TERM INSURANCE
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Term insurance comes in various forms and types available for different needs. The following are the types of term insurance plans
Level term plans
This is the most common type of term insurance, the amount of coverage provided at the beginning of the policy remains the same throughout the period of the term. It is simple, affordable with plenty of options to choose from when it comes to term lengths and amount.
With level term insurance, you get to choose your policy length and death benefit. If you die before the end of the term, your loved ones receive payments that can be used to replace income and cater to expenses. If you outlive the term policy, your coverage will end when the term does.
Increasing term insurance
Just as the name implies, your coverage amount increases throughout the policy term at a predetermined rate, this plan is best suitable if you perceive a rise in your financial needs in future.
This type is less common as it is cost more than a level term plan and has a longer tenure compared to other plans. You should note that your beneficiary receives a death benefit from the insurance company if you die during the term, if you die after the end of the term, your beneficiary receives nothing.
Decreasing term insurance
Contrary to increasing term insurance, the amount coverage decreases at a pre-determined rate as your age increase, it thrives on the idea that your liabilities might decrease as your age increase and the need for amount coverage might decrease. This type of insurance plan is suitable for the protection of personal assets.
Return of premium term insurance
This is a type of life insurance policy that returns amount coverage if you survive your policy term. This insurance plan is usually offered by companies with high financial capacity ratings and positive reviews, each company offers policies with varying terms and policy limits as well as guaranteed death benefits. The return of amount coverage works only if you have not made any claim during the policy term
Convertible term plans
These insurance plans allow for conversion into another type of plan at a later stage as long as policy conditions have been maintained and payments are made on time. New or additional screening is not required to convert insurance plans
LEVEL TERM LIFE INSURANCE
In this type of term insurance, the insured is covered for a particular period of time usually 10-30 years. Its death benefit remains the same throughout the period of the term, you can choose to renew this plan when it ends.
Life insurance companies calculate your premium rate by certain criteria, some of which are age, gender, overall health, type of policy you buy and the amount of coverage chosen.
TERM LIFE INSURANCE BY AGE
The older you get, the higher your life insurance rates. This is because the older you get, the shorter your life span and health-related issues related to old age. Younger people tend to pay the lowest life insurance rate
TERM LIFE INSURANCE CALCULATOR
This lets you calculate the amount you need to pay for your life insurance by putting your requirements into consideration.
The following information is needed to calculate term life insurance rates
- Applicants age
- Type of plan
- Gender
- Premium frequency
- Sum assured amount
- Birthdate
- Rider
- Tenure
- Name of the proposer
Using an online term calculator, enter your personal details in the boxes provided and the calculator will evaluate and deliver results and appropriate life insurance plans regarding the details shared earlier.
LIFE INSURANCE QUOTES
A life insurance quote is an online tool used to estimate the total amount of coverage you selected and the information you entered, this allows you to compare and evaluate various insurance plans and their differences and the term length of policies from different insurance companies.
BEST TERM LIFE INSURANCE COMPANIES OF 2022
These are companies that have proven their worth over time in the industry, they are reputable, have strong financial ratings, positive reviews and multiple policies to choose from and they make it easy to get a quote.
- Prudential:Best overall
- State Farm: Best instant issue
- Transamerica: Best value:
- Northwestern Mutual: Best whole life
- New York life: Best term policies
- Mutual of Omaha: Best for no medical exams
- USAA: Best for Military
Hope you now understand how term life insurance works, we believe this article has helped. You can join Us on Telegram for more on insurance matters
