Deciding what kind of insurance to buy can be a real pain in the neck. Insurance salesmen can be very pushy and of course, no matter what they sell, their product is usually the only one that will give you what you are looking for. Before making any bad decisions, rest assured that term is the best you can buy and it’s the most affordable. How does term life insurance work? Here goes’
Term insurance got its name from the simple fact that the insurance is purchased for a specific period of time, or a term. The term usually runs anywhere from ten to forty years and they go up in five year increments in between.
Premiums are lower for young, healthy individuals. Occasionally you might be required to undergo some simple tests like blood work or a urinalysis. Some carriers insist on what they call a cheek swab as well; this checks for some diseases as well as for drugs and tobacco.
The results of these tests will help determine your premiums. Even someone who does have some health issues can still be insured. Things like diabetes or high cholesterol might make your premiums go up, or depending on how bad the problem is, you might be ‘rated’. This is a category that is literally a red flag, but even with high premiums you’re still covered.
Unfortunately, mistakes can be made and some people are rated who should never have been. If you are rated, you do have the right to have the information corrected. Your doctor can submit documentation showing that you do not have the disease or condition that has caused this rating. It could take a while to have the problem solved, but it’s in your best interests to indeed get it corrected.
One of the many benefits of term insurance is that one policy covers an entire family ‘ parents and children. Cash value policies cover only one person, making coverage for families very expensive. As an example, a young husband and wife who want coverage of $200,000 for each, and perhaps even a $15,000 child rider (which covers all the children, not just one), can expect to pay less than $100 a month for this level of protection.
With term insurance you are buying only a death benefit. There are no savings or investment plans attached to your life insurance, and that’s the way it should be. There is no reason to mix the two! Should you die during the time the policy is in effect, your beneficiaries will be paid the face value of the policy immediately.
Parents are sometimes hesitant to have their children covered, however, unexpected deaths happen all too often, and many families find themselves in financial despair when they can’t even pay for their child’s funeral. This is exactly what the child rider is there for.
Investing in life insurance can be frustrating if you’re not 100 percent sure what you are looking for or if you have no idea how to find it. If you’re in the market for insurance, you’re undoubtedly thinking, “How does term life insurance work?”. Whole life vs term life insurance info!
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