Wednesday, September 18, 2013

The Process For Acquiring Term Life Insurance

Life insurance can be one of the most important investments a person can make, especially those who have families that are at least half way financially dependent on them. Life insurance is often used to cover immediate costs for funerals and related processions, or to alleviate the burden of loss of income for a reasonable period of time until such income can be restored or adjusted to. The easiest and simplest type of life insurance is called “term” insurance. Many agencies offer flexible time, budget, and application options for term life insurance.

Why Choose Term Insurance?

The major benefit of choosing Term insurance lies in the fact that insurance premiums greatly increase as age increases and health decreases. Those who did not purchase insurance at a younger age will not be locked in at a reasonable rate. Term insurance is also very straightforward - a static rate pays for coverage, and that coverage remains static as well. Some prefer this over others which may start out low and slowly increase, or fluctuate up and down as markets do.

Step One: Research Companies

The first step in obtaining term life insurance is to find a company. Applicants should talk to several agents and visit many homepages. Compare rates, options, and reputations. Take the time to delve deeply into reviews and ratings on comparison websites, and if possible, try to find real customers to ask questions. Finally, determine the financial security of each company that is in consideration - they cannot provide coverage if they go bankrupt, after all.

Step Two: Decide The Term

Each insurance agency will differ in the time frame that they offer as a “term”, but most generally require a period of either ten, twenty, or thirty years of coverage. Choosing a term depends entirely on the needs of the applicant and will vary greatly in each case. Applicants should consider why they are acquiring the insurance, how long it is necessary, and which term fits their budget. The premium will not increase until the term is over - once this point has passed, it will increase every year.

Step Three: Choose A Type That Matches Your Term

There are various types of life insurance that provide different benefits. Some are offered in certain terms while others are not, and all agencies are different. One type is called a return of premium; the purchaser will pay the premium for the selected term, which increases every year regardless of the original term selected, and if he or she lives longer than the term the money is returned in full. If the purchaser chooses to extend the term, any premiums paid after the original term will not be reimbursed. Another type is a low budget, short term five year plan which is cheap to start and offers decent coverage, but the premium increases significantly. For this type, there is no “original term”.

Term life insurance is a great alternative to permanent insurance because it is cheap and simple. One should always fully investigate all available options when choosing any type of insurance and then choose the company and plan that fits their specific needs.

Author Bio
Terry Johnson practices bankruptcy law in Memphis, TN. He also blogs in his spare time and enjoys writing informative pieces about financial topics.

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