Term Life Insurance

Nobody likes life insurance, except maybe the companies that sell life insurance policies. Thinking about life insurance raises uncomfortable thoughts about your own death, and how your family will cope financially. Having a life insurance policy means paying significant monthly premiums for benefits that you yourself will never enjoy. But there is another, more positive way to look at life insurance. Having an adequate life insurance policy provides protection for your loved ones, and the peace of mind of knowing that your family will have financial security when you pass away.

Choosing the right life insurance policy is extremely important, because it has to offer adequate coverage for your specific personal and financial situation. But the sheer number and variety of available life insurance policies can be overwhelming. You need to be sure that you have all the necessary coverage, but at the same time you don?t want to be paying for expensive, unnecessary add-ons.

Let?s consider the basic definition of a life insurance policy. In its simplest form, it?s really just an agreement that a company will pay cash to the designated beneficiaries when the policy holder dies. But there are many variations on this basic idea, and that?s why shopping for the best life insurance policy can be complex.

All types of life insurance can be broadly categorized into two groups. The first group is ?protection only? life insurance, also called ?term insurance,? pays out benefits for a limited period of time, usually 10-30 years. If the policy holder dies after that period of time has elapsed, then no benefits are paid out.

One type of this ?protection only? life insurance is ?decreasing term? life insurance (also called ?mortgage protection? where the amount of coverage becomes smaller as one?s remaining mortgage debt decreases. The second type is ?level term? life insurance, where the coverage never changes. The third and final type of ?protection only? life insurance is ?increasing term? life insurance, where the amount of coverage grows with inflation.
The second broad category of life insurance is ?investment? life insurance, which provides a way to save money. The endowment policy, for example, is a savings program that also pays a death benefit (or, if the policy holder survives, it pays a benefit at the end of the term). Another type of policy, known as ?whole of life,? promises to make payments whenever the policy holder passes away, regardless of his or her age, so long as the monthly payments are made.

When choosing a life insurance policy, you need to carefully consider the financial needs of you and your family. This lets you identify how much coverage you need, and then you can consider which of the types of policies outlined above provides the best coverage.