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Term Life Insurance Explained

Jun 5, 2008
The purpose of life insurance is to provide protection for your family and other dependents that look to you for financial stability, as the primary earner.

One form of insurance called term life insurance is the first form of life insurance to be developed. Though there are now more elaborate forms of insurance coverage with extra incentives attached, term life simply provides protection without accrue extra cash value like whole life insurance, and different forms of universal life insurance do.

If tragedy strikes and you die prematurely, your family and dependents can be afforded financial coverage not only to pay for your final expenses but also compensation, financially, for the loss of your income so they are not crippled by debt. This may vary from a percentage to total coverage of that initial loss based upon the type of policy you have.

Term life is a form of coverage t hat is geared towards people who have families. Yet, there are some real benefits available for those who do not have any family or dependents. This might mean using your insurance to cover your own funeral expenses, which can be quite costly.

With this type of insurance, you are actually covered for a set period of time. Once that time has elapsed, the insured party is under no obligation to retain a policy. This is why it called "term" life insurance. You have coverage for a term. If you decide to continue the policy, you will have to pay annual premiums that will increase in cost each year.

Like other types of insurance, Term life is used to satisfy claims against the insured as long as premiums are paid up and the term contract is still in operation. To illustrate this better, consider your car insurance policy. The coverage is used to satisfy claims against the insured when there is an accident. The same is true of homeowner insurance. In this case, the coverage is used to satisfy the claim made on a home when it has suffered damage.

Term life functions not only as a means to pay final expenses, but it really exists to cover the financial responsibilities of the one who has been insured. Examples of these types of expenses include mortgages, consumer debt, dependent care, college tuition for dependents, etc.

Term life insurance should really be taken out for at least a ten-year period. The reason for this is that health can decline quickly and often if you have taken a very short coverage period, it may not be possible to get further coverage after the term has expired if you are dealing with serious medical illness.

Many people consider term life insurance an absolute necessity. Yet, in some cases, it may not be feasible. The majority of those people who have some sort of life insurance policy have gotten them after they have gotten married or had children. There are benefits even for a single person. Having enough coverage to pay funeral expenses can remove the burden from parents or other relatives.
About the Author
Joe Kenny writes for Ridoe.net, offering some fantastic life insurance quotes . Also available are auto insurance and home insurance quotes .
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