Term Life Insurance FAQ
May 2, 2009 |
Featured, Term Life
People often have questions about term life insurance. Here are answers to some of the more frequently asked questions.
1. Why should I buy life insurance?
The purpose of life insurance is to pay the funeral expenses and outstanding debts you may have at the time of your death, as well as provide a means of support for your children, spouse, or others who may financially depend on you.
2. What is a term life insurance policy?
A term life insurance policy is a policy that provides coverage for a specific time period. The beneficiary receives the benefit if the insured dies within the coverage period.
3. What is the advantage to buying term life insurance?
Usually a term life insurance policy costs less than a permanent life insurance policy because the coverage is for a shorter period of time. Some term life insurance policies even allow the policy holder to collect on the paid premiums after the term has expired.
4. How much insurance coverage do I need?
The amount of insurance coverage you will need depends on several factors. One major factor is the amount of outstanding debt you have as well as factoring in any funeral expenses and outstanding unpaid bills. One rule of thumb that is suggested is to multiply your net income by ten.
5. What term length should I choose?
The term length you choose will depend on your preferences and what terms your life insurance company has available to you. Some people prefer to have shorter terms so that they can continue to reevaluate their life insurance needs. Individuals who prefer stability may elect longer terms.
When you are choosing a term length you should consider your age and the ages of your spouse and children If you have long term obligations such as paying off a mortgage or sending your children to college, you may need a longer term insurance policy.
6. Is there a way to make my term life plan a permanent one? If so, how?
Permanent life insurance plans cover the insured for life provided that premiums are paid on time. These plans are more complex than term life insurance plans. Some term life insurance policies can be converted to permanent plans. However, the terms on the policy may change. You can ask your insurance agent how you can convert your insurance policy.
7. Why do I have to take a physical exam?
Insurance companies often do require that a medical exam be taken by individuals looking to purchase insurance coverage to ensure that they are not in bad health or have a preexisting condition. Older individuals and those with preexisting conditions or bad health will most likely pay higher premiums on their insurance coverage.
8. What does an insurance agent or broker do?
An insurance agent or broker works for an insurance company. They are assigned to assist policy holders with their insurance needs. The agent or broker can advise you on the specific details in your insurance contract. They are also the person you can contact or who your family can work with to file a claim.
9. Will I be able to get my money back when the policy ends?
It depends on the particular policy. Some do offer this as an option and some don’t. Most term insurance policies will offer you the option to renew. Be sure to read all of the terms and conditions of the insurance contract carefully before agreeing to any insurance policy.
Tags: frequently asked questions, Term Life
