Term Life Insurance Guidelines

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Term life insurance is a relatively inexpensive form of life insurance that provides benefits to dependents for a certain period of time if the insured person dies. Protect family from dealing with the financial burden of a loved one dying prematurely by obtaining term life insurance with tips from a financial adviser and insurance broker in this free video on insurance.

Part of the Video Series: Insurance Tips & Facts
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Video Transcript

Term life insurance will cover you for a specified period of time or a term. Now that term could be 10 years, it could be 20 years, 30 years or it could be to what's called an attained age, an example up to age 80 you can have that term insurance. Term is a great way to get a lot of insurance for a very cheap amount. It's often referred to as renting insurance because you aren't having the policy for your entire life, potentially, you're having it for only this specified period of time, you're in effect renting the insurance. Now the term insurance is a great way for people who have dependents who depend on their income who have a mortgage, kids, etcetera. It's a great way for those people to provide some benefit to their beneficiaries in the event that they die prematurely. Often times small families starting out will need a lot of insurance, but their budget can be a little bit tight. So term insurance is a great choice for them. They can obtain a lot of coverage and basically protect and meet a lot of their needs through that term insurance product. The term insurance will be that specified period of time or term. It will have a face amount which will be the amount of insurance that you will receive and then it will also have a premium. So the premium that you could pay either monthly, quarterly, annually, semi-annually, that will be your premium is the amount that you will pay. Now some policies will have a level premium meaning that over the course of 20 years you pay the same amount each month. Whereas other policies may have an increasing premium each year. So the premium will go up 3, 5% each year and that's based on each year you're getting older you're one year closer to dying. So the premium is more expensive because the insurance company is taking on a greater risk. Now some other guidelines to consider when purchasing term insurance is your individual health and health history. Someone who is an ideal weight, very healthy individual with not too great of a medical history can typically obtain a lot lower rates than somebody who is overweight and maybe has had history of heart problems, etcetera. People with a great medical history may not even be able to obtain term life insurance. And because term insurance is only for a specified period of time, having these health ratings or health issues can significantly increase the cost. Another factor to consider is smoking. Smokers will pay more, considerably more then non-smokers for life insurance coverage. So these are some important guidelines to consider.

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