What is term life insurance?
Simply put, life insurance is money an insurance company pays to your named beneficiary
when you die. Your beneficiary can use some of this money to pay the expenses related to
your death, and can invest the rest to generate income that will help replace your salary.
You can name anyone you wish as your beneficiary.
Do you need it?
Yes, if other people are dependent on you and will suffer financially if you die. For
example, life insurance is a necessity for anybody who has dependent children. You don’t
need it if you have no financial dependents.
What is Term Insurance?
Term life is the simplest and least expensive type of policy. It’s pure insurance
with no cash value account. A term life policy has only one function: to pay a specific
lump sum to whoever you have designated, upon a specific event - - your death. The death
benefit and the policy limit are the same - - a $200,000 policy pays a $200,000 death
benefit. The policy protects your family by providing money they can invest to replace
your salary, as well as to cover immediate expenses incurred by your death.
Term life insurance comes in two basic types; annual renewable and level term.
With annual renewable term insurance the premiums go up each year. With level
term policies the premium stays the same for a given period of time (typically 5, 10, 15
or 20 years) and then begins to increase each year.
