Saturday, April 11, 2020

Term life insurance - How it works

Term life insurance – Why should one buy?

In general, life insurance is purchased to replace your income if you die, so your loved ones can pay debts and living costs.

For example, if you and your spouse own a home and you were to die tomorrow, your spouse would have to pay the home loan on his or her own. If you have the right term life insurance policy, your spouse will receive enough amount from the policy as death claim to pay off borrowed money.

Term life insurance - How it works

Term life insurance is designed to provide financial protection for a specific period of time, such as 10, 20 or 30 years. With traditional term insurance, the premium payment amount remains same for the coverage period. Because of its low cost, compared to other types of life insurance, term life is a popular life insurance choice. 
When you buy a term life policy, an insurance company promises to pay a set amount if policyholder dies during the policy’s term. In exchange of premium that pay every year till the duration of that term.

How much life cover required?

Keep in mind these key points about term life insurance:
The calculations behind life insurance rates are all about life expectancy. That's why life insurance costs more as you get older.
In life insurance Human Life Value concept is followed to determine coverage at the time of taking policy that is calculated on the bases of annual income and net worth of individuals.

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