Term Life Insurance
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Term life insurance also referred to as pure life insurance, is a type of life insurance that ensures your family is taken care of financially if you die. This type of health insurance policy can benefit both young people with families, and seniors interested in just a short term life insurance policy.
What Does Term Life Cover?
Term life insurance is designed to help a policyholder’s beneficiaries if the policyholder dies unexpectedly. As its name suggests, term life insurance has term limits with the most common being between 10 and 30 years. If a policyholder dies during a term, a death benefit will be paid to their beneficiaries. If the policyholder lives past the term, the insurance policy will terminate and there will be no payout.
Beneficiaries can use the death benefit on anything from funeral costs to a mortgage to college tuition. There are no requirements on how they use death benefits.
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Types of Pure Life Insurance
There are several types of term life insurance. Below are the three most commonly chosen.
- Yearly Renewable Term (YRT): this one-year policy is allowed to be renewed each year with the premiums starting low and increasing annually. The amount paid after death meanwhile stays the same.
- Level term or level-premium: in these types of policies, the premium and death benefit remain the same during the term– which is commonly 10 to 30 years. While the premium is typically higher than other policies, the coverage increases at no additional cost.
- Decreasing term: this type of pure life policy is renewable with premiums at a fixed rate. The death benefit decreases each year.
Other Types of Term Life Insurance
- Guaranteed issue or simplified issue term: this type of policy covers anyone regardless of their health. The premiums are typically higher and have lower payouts. Oftentimes guaranteed issue life insurance policies will have graded benefits which will pay only a partial death benefit if the policyholder dies in the first few years.
- Final expense: Like guaranteed issue life insurance, a person cannot be turned down for this type of policy. This small policy has a lower death benefit and typically has higher premiums. Its common purpose is so that beneficiaries can cover funeral expenses like caskets, plots, and burial.
Return of Premium (ROP)
A return of premium is an optional rider attached to a pure life insurance policy. It’s designed for policyholders to receive part or all of the premiums they paid if they live passed their selected term. The premiums are typically higher than just term life insurance alone but the money returned isn’t considered income, so it’s tax-free.
How Much is Pure Life Insurance?
Term life insurance premiums are unique to the policyholder. They are based on several personal factors including your:
- Health (you may need a medical exam)
Which Term Life Insurance is Best?
There are several variables to consider when deciding if you need term life insurance including your age, health, debts, and the financial needs of your family. Death is a topic no one enjoys talking about.
Contact Our Local Insurance Agents
At Signature Insurance Group, we will sit down with you and help you determine which type of life insurance is best for you and your family. We even offer free quotes, so contact SIG today!Back to Life Insurance
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