Updated: Jan 18
What is Term Life Insurance?
Term life insurance is a type of life insurance policy that provides coverage for a specified term, or length of time. It pays out a death benefit to the beneficiary if the policyholder dies within the term of the policy.
Most term life insurance policies are renewable for one or more additional years even if the insured’s health has changed. Each time the policy is renewed for a new term, premiums increase. If the policyholder outlives the term, the policy will not pay out a benefit if the adjusted premiums are not paid.
Why Term Life Insurance?
Term life insurance is typically less expensive than permanent life insurance, which provides coverage for the entire life of the policyholder. However, term life insurance does not build cash value like permanent life insurance does, so it may not be a good fit for everyone.
Some people choose term life insurance to cover specific financial obligations, such as a mortgage or a child's education expenses. Others may use it as a temporary form of financial protection while they are young and healthy, with the intention of switching to a permanent policy later on.
Term life insurance can be a good tool to protect your mortgage and provide financial security for your family in the event of your death. If you have a mortgage and other dependents, such as a spouse or children, term life insurance can help ensure that your loved ones are able to continue living in their home and maintain their current standard of living even if you are no longer around to provide for them.
Here's how it works: if you die within the term of your policy, your beneficiary will receive the death benefit from your policy. This money can be used to pay off your mortgage and any other outstanding debts, as well as to cover living expenses and other financial obligations.
It's important to choose a term life insurance policy that has a term that aligns with the length of your mortgage. For example, if you have a 30-year mortgage, you may want to consider a 30-year term life insurance policy. This way, your policy will be in effect as long as you have a mortgage to pay off.
It's also a good idea to consider the amount of coverage you need. You'll want to make sure that the death benefit from your policy is sufficient to pay off your mortgage and provide for your family's financial needs. A financial professional or insurance agent can help you determine the right amount of coverage for your circumstances.
Term life policies from many carriers generally contain a conversion feature. This enables the policyowner, prior to the final conversion date, to exchange the term life policy for a permanent plan of life insurance such as whole life or universal life, without evidence of insurability. Premiums for the new policy will be higher than what the policyowner had been paying for the term life insurance.
It's important to carefully consider your needs and goals when deciding whether term life insurance is the right choice for you. You may want to consult with us to help you understand your options and make the best decision for your circumstances.
Overall, you've learned that term life insurance is a great way to ensure that your loved ones and/or businesses are protected in the event of your death.
To get more details on they types of Term Life Insurance, and which types are best for your Financial Plan, feel welcome to contact us at www.aipsny.com/contact-us.
SAFEGUARDING YOUR HOME MORTGAGE There's nothing like the feeling of owning your own home. It's a part of the American Dream - to live in a home that you can truly call your own. Realizing how important your house is to you and your family is the first step. Deciding on ways to safeguard your investment is an important step that will help guarantee the joy of owning your home for years to come. We can help alleviate some of the worry that comes with ownership. One major concern may be that your family will face difficulties paying off the mortgage in the event that you pass on. One of the ways to help assure your family's financial security is to consider life insurance products as mortgage protectors.
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