Advantages of Term Life Insurance: Term life insurance offers certain comparative advantages over permanent ones, so it is worth knowing them a little more.
Term life insurance has innumerable advantages for those who choose them, however, it is necessary to know their modalities well.
Advantages of Term Life Insurance
The life insurance term is extremely simple, only requires the operator chooses the amount of coverage and the number of years for which wants to cover. The length of time a policy lasts ranges from 1 year to 30 years.
Once the term has been chosen, when the time comes when it expires, the owner has three options: renew it, modify it or let it expire by the expiration date.
The possibility of having term life insurance can be strategic, since many people see this as a waste of money, although they do understand that it can help survivors a lot in the face of a deadly catastrophe, so there is nothing better who opt for a fixed term life insurance.
A simple case where this type of insurance is perfectly applied is that of the family that has small children and has bought a house with a 20-year term. By opting for this type of term insurance, they can hire it for 20 or 25 years, which guarantees the term of the house payment and 5 more years of coverage.
Each person can have several simultaneous insurance policies, in which case when a policy expires, another policy remains and so on. The terms of this type of policies are:
- 1 year, but renewable every year
- 5 years, renewable
- 10 years
- 15 years
- 20 years
- 30 years
- Until reaching a specific age, 65 years, for example
Types of term life policies
Within the universe of term life policies, there are those that are known as “leveled”, whose main characteristic is that of not changing the insured amount over time. Another type of term life insurance is what is known as “declining”, and its main characteristic is that of lowering the amount of coverage as the years go by.
Declining policies can start with $ 100,000 coverage and after the first five years offer $ 90,000; After 10 years of coverage reach $ 80,000 and so on.
Choose a renewable or non-renewable term policy?
The choice will always be the holder, however, it is preferable to have a renewable type, because the main advantage of it is in being able to “renew” when the expiration date arrives, avoiding the insured having to present new medical examinations and requirements such as Anyone who does not have insurance. The idea here is to avoid having to give all the background information again, as it is likely that the insurer will change its rate or decide not to ensure the person.
Saving the presentation of new medical exams to renew the term life policy does not exempt the owner from dealing with new securities (more expensive premiums) since it is obvious that the owner is older and involves another risk for the company.
Another comparative advantage of this type of insurance is found in the possibility of the holder, of converting his term insurance for a permanent one, not choosing to renew it for a definite term again; if a conversion of the type of policy is mediated, there is no need to present new information, but the value of the premium will be adjusted according to the age, sex, and lifestyle of the insured.
What are the policies with reimbursement of premiums?
This modality can be considered extremely attractive for many, because the eternal problem of this type of policy lies in the feeling of “no need” that each person feels against the possibility of hiring life insurance, since no one believes that it is going to die, and even less wants to happen, it is even common to hear phrases like “nobody is going to profit with my death,” for example. Notwithstanding the foregoing, the always versatile insurance market devised what is known as a “premium reimbursement policy”.
This system gives the possibility to the insured to obtain what was paid in annual or monthly premiums in case of not having died, which could be considered a saving at least and at the same time, an advantage in case something had happened. In these cases, as the company always has to earn something, a surcharge is made on the premium that must be paid, and therefore those who make sure will have to think very carefully before taking this option.