Term life insurance can be a cheaper choice.
Term life insurance is a coverage which is guaranteed for a
specific period of time at a constant rate.
It is usually the cheapest life insurance available to an individual,
but it only pays the benefit if you die during the term of the
The biggest advantage of term life insurance is its affordability
compared to regular life
policies. You can buy more coverage for less, however, at
the end of the specified period of time, you are left with nothing.
The logic is based on the presumption that by the time the policy
expires, your survivors will have saved enough and their living
expenses will have been greatly reduced.
Some term life insurance offers renewal at the end of the term,
but the rates increase dramatically, and sometimes you have to
provide the evidence of insurability.
Advantages and disadvantages of low cost term life insurance.
- it can cover the expenses which will disappear as you get
older, such as a home mortgage.
- the premium is lower compared to permanent (whole) life insurance.
- term life insurance usually does not offer so called
“accelerated benefits” or terminal illness benefits.
- coverage ends at a specified point in time and even if the
policy is renewable; it is often too expensive to continue.
Convertible term life insurance.
Some insurance companies sell term insurance with a guarantee
to convert to one of the permanent life plans, without having
to undergo a medical exam, or provide evidence of insurability.
Term life and promotional premiums.
For young people, who in general are healthy, term life
insurance can provide both protection and affordable rates.
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Without these cheaper premiums, many young people would not be
able to afford any life insurance. When still at a young age and
in good health, it is possible to switch companies, since many
companies offer special promotional rates for the first year,
(or a few years) of your term life policy. However, beware that
the insurance company will most likely investigate thoroughly
if the claim is made on a policy that was in effect for two years
or less. This is why all the statements on a new insurance application
must be truthful.
Also see: term