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What are Term Life Insurance Premiums and Polices?

What are Term Insurance Premiums and Polices
The most affordable and simplest form of coverage is known as
term life because the premium or payment amount is guaranteed for a set amount of years or a term.
The term generally ranges between 10 to 30 years.
How does Term Insurance Work?
Here is an example: Daisy Smith pays a $25 monthly premium for a policy with a 30 year term and as a result, secures a $500,000 policy.

Of course, insurance premiums vary depending on one's health and age. As the rates and cost associated with term coverage are lower than most policies, policy holders are able to maximize their coverage benefit, making this type of insurance the most popular choice among families
  • Maintain your family's standard of living with income replacement
  • Pay off debts such as a mortgage, credit cards, etc.
  • Pay for children's college education
  • Key person or buy/sell agreements for a business
  • Divorce settlement
  • Pay for final expenses
What are Common Additional Benefits or Riders
A rider is an additional benefit that can be added to a policy. The purpose of rider provisions is to allow for additional benefits and meet the unique needs of policy holders. It also empowers the policy holder to make changes to their coverage as changes in life situations arise. It is important to understand the terms of each rider as each insurer may have different definitions that can impact your qualifications. Also, keep in mind that in most cases, buying a rider may require paying an extra premium for this supplementary benefit. A few of the more common riders available are listed below:
Waiver of Premium
In the event that the insured becomes disabled, this rider will pay the premiums on your policy for the duration of its term. The definition of “totally disabled” may vary from one insurer to another, making it important to be aware of the terms and conditions of this rider.
Accelerated Death Benefit
This rider is included in most policies at no additional cost. It provides that a portion of the death benefit becomes available to help with expenses, if the insured is diagnosed with a terminal disease considerably shortens their life expectancy. Also, the definition for “terminal illness” may vary depending on the insurer, so make sure you are familiar with the terms and conditions.
Child Protection
No one wants to think about the death of a child. However, in addition to relieving the financial burden to the family, this rider also typically provides a guaranteed conversion option to a permanent policy, multiplying it up to five times the original face amount. This essentially guarantees parents the ability to purchase lifetime coverage for that child without requiring a medical exam.
Conversion Option
Typically when you purchase term coverage it is for a period between 10 and 30 years. With this rider, some policies will allow the coverage to convert into a permanent life product without a medical exam. This can be beneficial especially to someone whose health has deteriorated over the years and may not be able to secure new coverage at the end of the guarantee period.
Return of Premium
Should a person outlive the initial guarantee period, the owner of the policy receives a refund for premiums paid during that time. In the event of the policy holder’s death, their beneficiaries will receive the paid premium amount.
Buying insurance can be complicated and confusing. Understanding the various types of insurance available is an important step to providing life security. You can also use our online insurance calculator to help determine what the best options are for you.
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