Understanding Life Insurance

Term Life Insurance

When television commercials pitch low-cost life insurance with slogans like, '500,000 dollars in life insurance for just thirty dollars a month,' they are selling term life insurance. It's called term life because the insurance runs for a specified period, as opposed to a permanent policy. Common term lengths are ten, twenty, and thirty years. Term insurance is inexpensive compared to permanent policies because the insurance company calculates the odds of the insured outliving the policy's term as overwhelmingly likely. An insurance company would go out of business if the odds weren't greatly in its favor if it offered 500,000 dollars for thirty dollars a month. For this reason, insurance companies base their term rates on the length of the term, and the longer the term, the higher the required premium. Many companies also consider factors such as the insured's medical history. Term life policies provide no cash value. Insurance agents sell term policies to people who need a high amount of coverage for a period, such as when they have children or a home mortgage. Many term policies offer the option of converting part of the policy to permanent insurance without medical underwriting.

Continue reading to reveal detailed information about universal life insurance.