Life Insurance can be Cheap
The first impression that most people have of life insurance is that it is expensive. But in fact, the price of life insurance can be very friendly. That is the initiator of all life insurance: term life insurance.
What is Term Life Insurance?
Term life insurance, guarantees payment of the death compensation within a specified period, which is generally 10 years, 15 years and 20 years. Once the term of the contract has expired, the policyholder can renew another term life insurance contract, or convert to a life insurance contract, or terminate the contract. Term life insurance provides agreed compensation when the policyholder dies, usually a large sum of money. The condition precedent to compensation is that the death of the policyholder occurred within a specified period.
Classification of Term Life Insurance Products
Even term life insurance has different product categories, mainly:
Fixed Premium Fixed Term Life Insurance Products This is the most common type of life insurance. You pay a fixed premium every year or every month and your beneficiary will receive some compensation after your death. According to insurance agency statistics, term life insurance products with a 20-year warranty period are the most popular term life insurance products.
Term life insurance products renewed every year The advantage of this product is that you have the right to choose to continue renewing every year, but the premium is no longer fixed and may vary from year to year. This product is suitable for customers who need very short term protection. In general, it costs more than fixed-term life insurance products with fixed premiums.
Term life insurance products with decreasing amounts The premiums for these policies are fixed, but the sum insured gradually decreases over time. Customers who purchase such products may wish to face a specific debt period, such as a 20-year mortgage.
Refundable term life insurance products This type of policy reimburses premiums to clients who have lived beyond the agreed period of coverage. Some customers don't like paying long for something without a reward, they think the money is used to float. However, to benefit from the reimbursement of premium products, you must pay more.
Premium of Term Life Insurance
The age, sex and state of health of the policyholder are the main determinants of the calculation of the insurance premium. Depending on the name of the police, a medical examination may be required. Other common factors that affect premiums include driving records, current medications, smoking, occupation, hobbies and family history.
For the duration of the contract, the premium is fixed. However, as the policyholder's life expectancy decreases, the cost of insurance will also increase. After the renewal, the insured can see that the premiums have increased considerably. According to actuarial data from 1980, the average life expectancy of Americans is 78 years. Therefore, the life expectancy of a 20 year old person is 58.86 years, while the life expectancy of a 50 year old person is 28.86 years. The risk of insuring 20 year olds is lower than the risk of protecting the 50 year old, so the prices are different.
Interest rates, the financial situation of insurance companies and national regulations also affect premiums. Generally speaking, companies generally offer the following classic insured options: US $ 100,000, US $ 250,000, US $ 500,000 and US $ 1,000,000.
Benefits of Term Life Insurance Products
Term life insurance products are cheap and simple. Please consult the following monthly reference table of term life insurance products, you may be very surprised. And the usual choice is 10 years, 20 years, and compensation after death, simple and clear.
The death benefit is exempt from tax. Individual retirement accounts can be taxed, social security pensions are generally taxed, 401 (k) benefits will be taxed, and most retirement benefits will also be taxed. But the death benefit for life insurance is completely tax-exempt.
Life insurance products are exempt from probate certification. If you die, all of your assets must go through a court-certified probate certification process before they can be successfully passed on to heirs. The approval process can be costly (such as tax deductions), or it can be very long (if the family situation or property management is more complicated). Life insurance products do not pass the will certification process. Your beneficiary received the funds directly.
Term life insurance products can be converted to life insurance products for free or subject to conditions. Most term life insurance automatically includes a free term life conversion contract. If you decide to take out a life insurance policy for life in the middle, you do not need to reinsure and you can directly change the policy.
4. Although the premium is cheap, the function of term life insurance is not discounted. In addition to compensation in the event of death, some term life insurance products have additional clauses such as critical illness, serious injury and chronic illness, and there are no additional costs.
Disadvantages of Term Life Insurance Products
Deadline: This type of insurance is only guaranteed for a certain period, such as 10 years, 15 years, 20 years and 30 years. If the insured dies within the validity period, the insurance company pays the sum insured. After the expiration date, as you get older, you often need to review your purchase.
Single-function: term life insurance is mainly used for death compensation. The insured generally has to die before making the payment *. It has no monetary value and no savings and investment function.
Renewal costs are high: Whatever your age, after the expiry of the policyholder's term life insurance, you must decide the premium based on the age and physical condition of the time. Problem, then the premium can double or more. The older the age, the more difficult it is to insure.
Average monthly spending by healthy 30-year-old men
Types of Term Life Insurance
Term life insurance 10 years $ 17 / month Term life insurance 15 years $ 21 / month Term life insurance 20 years $ 25 / month Term life insurance 25 years $ 30 / month
The amount of term life insurance you need varies from person to person and also determines the cost of your premium. In general, the higher the sum insured, the higher the premium.
Applicable Groups
Due to the characteristics of the term and the cost of protection, term life insurance is best suited for clients who need protection and have a limited budget in a specific period.
