Life insurance is an important decision.
You can achieve different goals by taking out a life insurance
policy. You can financially protect your family in the event
of a loss of life, and you may also use your policy as a tax
saving investment tool. Broadly speaking, there are two types
of life insurance – term life insurance and whole life
insurance.
What is Term Life Insurance?
Term insurance is a more pure form of life insurance. It covers
you for a predetermined period of time--usually one year,
10 years, and more popular 20 years. You can select short-term
and long-term policies depending on your income and financial
obligations.
Benefits of Term Life Insurance:
• Premiums paid are generally lower
as compared to other forms of insurance.
• It financially protects your dependents from payments
that need to be made against a debt.
• Provide for your dependents’ living expenses
and other expenses such as college.
• There are options such as "level premium"
policy – which you can lock in low rates for a specific
time period, say 20 years. After such time your rates will
increase.
Medical Requirements
Depending upon the face value of your policy and the insurance
company you are dealing with you may or may not be required
to give a medical exam. This examination is very basic in
nature. It records your height, weight, medical history and
tests your blood and urine. Your medical history, current
health issues and habits such as smoking would affect your
ability to get coverage and affects the premium you pay.
Renewing Term Life Insurance
You can renew your term policy when it expires without undergoing
another medical exam. However, now you would attract higher
premiums as you have aged and the likelihood you will die
sooner increases.
Incase you are unable to get coverage due to illness or a
troubled medical history, you may want to consider - guaranteed
issue life insurance coverage, also referred to as "quick
issue" or "simplified issue" insurance. It
requires no medical exam. However, you attract a higher premium
and have a wait period before the coverage begins.
Tips for Buying Term Life Insurance:
• Buy enough. Ensure your dependents
are covered until they can provide for themselves.
• Buy young and healthy. You will get the coverage
you want at lower premiums.
• Don't lie on your policy. Your loved ones may not
be compensated if you do not admit to a habit, behavior
or health risk.
• Review regularly. You may not want to increase or
reduce your current coverage. It would make a difference
of hundreds of dollars over the life time of the premiums
paid.
• Not every insurance company offers the same coverage
and rates. Shop and compare the policy which works best
for you.
• And finally, the insurance policy is a legal document.
Always read and fully understand before you sign on it.
