Term Insurance Coverage
Term insurance coverage is basically just what the name implies. It is a sort of insurance that covers the individual for a term, or specific period. It has become one of the forms of insurance that are recommended by financial advisors. It is acknowledged as having definite benefits among the insurance community as well. There are some limitations to these policies as well. Understanding both is an important part of solid planning. Benefits
It really does depend on who you ask, as to what response you will get regarding benefits. There are some standards that will likely be favorites among many potential owners. An insurance agent may be quick to point out that the entire benefit is available from the time the policy becomes fully active. This is significant. With other policies based on cash value the benefit may increase with the payment of premiums. With most term life the full benefit is available from the beginning.
The attraction for many financial planners is that term insurance remains so inexpensive. It has been pointed out time and again that if the owner invests the savings, compared to a typical entire-life policy, with a return of approximately eight percent over their life they will have more wealth than the value of the entire-life policy would be if it had been started at the same time. That is a convincing argument for those that are focused on creating wealth.
Term insurance has options as well. There are some policies out there that offer cash value features. These are more expensive than standard term insurance. In many cases there is no growth potential either. They are less expensive than most entire-life policies though, and they offer a return of nearly all the premiums paid in. Drawbacks
Now that term insurance seems so perfect, take a look at some of the drawbacks. These policies will not cover an individual for their entire life. If the individual wants insurance beyond approximately seventy-five years of age they will need a different type of policy at that point. This is a double-whammy for some. The first negative is that they have to go shopping for insurance, the second is that they are now at an age that makes premiums more costly. There are ways to avoid some of the negative, but term insurance coverage does expire.
Most policies do not have any value. This means that at the end of the policy the money is simply gone. This can be frustrating to some. While they are more costly, there are term policies with cash value features, as stated above. Considerations
Just because it does not cost much and it is not intended to last forever does not mean that term insurance is not a serious purchase. It is important to verify the quality of the company that is offering the policy. There are unscrupulous companies, even in the term insurance market. Similarly the details of the policy are key. Read over the policy itself. Listening to the insurance agent is a good start, but the actual details are in the policy.
Your insurance is about planning your finances after you are no longer here.
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