Titantium Shield
Term life insurance is a type of
temporary life insurance. The purpose of term life insurance is to reduce
financial risk for a fixed period usually between one to twenty years.
One example will make things
clear. Sarah buys a life insurance policy to insure her husband John's life.
She pays 20$ premium per
month to the life insurance company. The period of life insurance is for 20
years. So if John dies within 20 years, Sarah will get 4800 dollars. However if
John doesn't die within 20 years Sarah will get some money after 20 years which
will be much less compared to 4800 dollars.
However if she buys a term life insurance of
4800 dollars for 20 years, she may have to pay premium of less than 20 $, say
10 $ a month. If John dies within 20 years Sarah will get the death benefit of
4800 dollars, however if John doesn't die within 20 years, Sarah will get no
cash value at the end of 20 years. However since she has paid only 2400 $ as
premiums, her 2400$ are saved as compared to the permanent life insurance
policy which she can invest and make profit. In the US market the 2400$ if
invested wisely would have yielded much more than 4800$ to Sarah in 20 years.
The idea behind term life insurance is to buy
a life insurance policy for a period usually one year. The premium (the amount
you pay to the life insurance company) is much less compared to a permanent
life insurance premium. The insurance can be renewed after the expiry of the life
insurance term, but the premium keeps increasing as the insured ages. The
higher the age of the insured
Term life insurance is the cheapest life
insurance available on coverage to premium dollar basis. The death benefit is
non-taxable in the United States and the premium is also deductible from the
income to save income tax.
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