Canadian Finance Blog

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Understanding Term Life Insurance Posted: 20 Jun 2011 02:00 AM PDT Term life insurance is a kind of insurance that provides the client an agreed upon guaranteed death benefit in return for a fixed rate of payment over a specified time frame. An example of term life insurance would be if a client bought a policy with a death benefit of $30,000 for a 15 year term at $35 a month, if the insured died within that 15 year term, the beneficiary would get the money. But, if the insured person lives past the term, they would need to either buy a new policy at the current cost or choose to have no coverage. Term life insurance is cheaper than other types of insurance such as whole life, universal life or other kinds of life insurance products. Term insurance provides a payoff off as long as death of the insured meets the requirements for a payoff and the policy premiums are up-to-date. No refunds of premiums are given if the policy term runs out before the death of the insured. Common reasons for choosing term life insurance are to provide for the insured person's monetary obligations to be covered in the event of their death. Some financial advisors tell their clients to buy term insurance so that they can use the difference in its cost to build up a retirement fund. This way, if they die before that, their family won't be penniless. Term life insurance can be purchased for varying term lengths from one year to as much as 10 or more years. Prices for term insurance are based on the odds on whether or not the insured will die before the term of the policy is over. This typically means that the longer your term, the more you will end up paying. When the term is over, the insured can renegotiate for a new policy if desired. However, in most cases the client will have to undergo new testing to see if they are still insurable at the same rate. If you are in your twenties or thirties than chances are your premiums will not increase significantly when you go to renew your policy. Some types of term life insurance allow the insured to renew without needing to show they are still insurable. These policies have a feature called guaranteed renewability. The bottom line is that term insurance is a type of insurance with a fixed rate that is set up for a specified period. If the insured dies during that term, the beneficiary gets the funds, but if not, the policy term ends. Author Bio: This information was compiled by John O’Reilly from the website Lifecover: http://www.lifecover.ca/term-life-insurance/. Related Posts: Insurance You Can Do Without – Accidental Death Insurance Insurance You Can Do Without – Long Term Care Insurance Insurance You Can Do Without – Mortgage Life Insurance Understanding Term Life Insurance originally appeared on Canadian Finance Blog on June 20, 2011.

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