Term Life Insurance

As the name suggests term life Insurance is the coverage provided for a specific term. Once the term is over the policy ends. However the Insured always has the choice of either dropping the policy or pay increased premiums to continue the policy.

Term life Insurance is one of the very basic Insurance Policies. In this coverage the Insured is covered for the stipulated time period, during that term if the insured dies or suffers any accident, he or she is eligible for the covered amount. The point to bear in mind is that in this Insurance policy if due to any reason policyholder decides to cancel the policy; the premium amount is not refunded. It is the most affordable Insurance coverage for death benefit.

This is the most basic form of Insurance Coverage which builds no cash value. Term life Insurance simply provides umbrella till the stipulated time period, however at the end of the time limit the Insured is not awarded with any accumulated cash. Unlike many other popular Insurance policies which have hefty build up cash for the insured at the end, term life insurance is pure protection policy with affordable premiums.

The functioning of term life insurance is same as any other policy, and getting term life insurance quotes is just as easy as getting quotes for any other type of insurance. It settles the claim made by the insured if the premiums are regular and the time period of contract is still valid. To illustrate this, a car insurance would be settled in case of any car theft or accident happening. However if the Insured sells the car before the expiry of the insurance contract, he cannot claim the refund of the premium paid so far.

Similarly in case of Term Life Insurance if the insured dies during the stipulated time of the coverage, the beneficiaries are settled with due claim. However if the insured dies even after one day of the said term, the dependents are not eligible for any claim on the said policy.

Annual Renewable Term

The major issue faced by the insured while renewal of the contract is that of Insurability. It may happen that insured does not die during the stipulated time of the term insurance and rather develops a terminal illness. Bearing in mind the chances of his survival, he would wish to go for an extension of the policy, but most often companies refuse to do so because of insured now being terminally ill and thus not qualifying for insurability clause. Thus comes into scene the Annual Renewable term Insurance. In this insurance the premium is paid for one year but the policy can be continued for a stipulated time period (30 to 40 years). The premium with each passing year keeps on increasing.

Level Term Life Insurance

Level term life Insurance is more common in comparison to annual term insurance. In this insurance the premium is fixed on same amount for every year. In other words the premium paid for each year is same and fixed for the whole contractual period. However since the premium is calculated based on the value of money for the whole time period, it is often higher than the regular premium.

Term life Insurance certainly comes as a good package for people with limited monetary sources as it is affordable and also gives you the protection against the loss of your life. While opting for term Insurance it is important to assess the requirement of actual term for which the policy should be bought.