What Is a Term Life Insurance?

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Term insurance in its simplest form is life insurance that stays in effect for a specific number of years. The most common range is from 5 years up to 10 years, and can go up to 30 years. After the time period is up, the policy ends. If the insured person dies within the time period of the plan, the beneficiary listed in the policy would receive the full value of the policy.

Permanent policy

Most insurance companies give the holder the option to convert the term policy into a permanent policy within a specific period of time. For example, there may be an option to switch within the first 4 years of the policy. This clause is particularly attractive in case you have developed some type of ailment or disease that prevents you from buying additional life insurance. If the term insurance policy includes a conversion clause and it is still within the period you can convert to permanent, then you may do so even though your medical condition may not qualify you under normal circumstances.

Other life insurance policies

Aside from term policies, there are other options such as a yearly renewable term policy. It is one of the least costly, though it can become quite expensive in the long run. The way it works is that the policy starts out very low but increases each year and the cost of the insurance goes higher as you get older due to the increasing chance of developing some aliment as you age. Another popular life insurance policy is the decreasing term life insurance policy. It is well liked by many because it is used for mortgage protection. Whenever a homeowner dies, usually it's the family that pays off the remaining balance. In a decreasing term policy, the balance is paid off when the homeowner dies.

Other popular policies are the 5, 10 or 15 year term life insurance. These insurance policies will differ in the length of the coverage period but they appeal to people for various reasons. For example, the 5 or 10 year insurance may be the preference of someone who would like to see his kids finish school even if something happens to him.

In closing, a term insurance is a policy that sets up the immediate capacity to cover expenses in the event of your death, and to provide additional monetary support to your family.
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