Term Life Insurance Summary

By Compuquotes Team on October 15th, 2009

Term life insurance is cheap and can protect your family just when they need it.

Term life insurance is the simplest form of life insurance. The term of the policy is the length and the benefit is the amount your beneficiaries receive if you die before the term ends. If you buy a $500,000, 20-year term policy, you pay no more than the guaranteed premium for that 20 year period and if you die before the 20 year term ends, your beneficiaries receive the $500,000 benefit. At the end of the 20 year period, you may be given the option to renew.

Term Life Insurance Quote

When you receive a quote, you are initially placed in a risk category. This category is dependent on whether you smoke and your general health. When you submit your application, the insurance company further researches your current health and your health history to make a final decision on which category you belong in. This category helps determine the amount of your premium.

Term Life Insurance is the Cheapest Life Insurance

Term life insurance is almost always the cheapest life insurance because the company is only insuring you for a specific period of time. Whole life insurance, on the other hand, pays regardless of when you die.

To get the best premium, you should try to improve your risk category. Two ways to do this are:

� Quit using tobacco. You can save money but be aware that you are still considered a smoker for a period of time after you quit. Check with each carrier to find out how long this period is.
� Improve your body mass index. If you are overweight, losing weight improves your category.

Term Life Insurance Companies

Many companies offer term life insurance, but all of them operate differently. It is important when choosing a life insurance company that you use a well-rated company. Some of the common rating agencies are Standard and Poor's (S&P) and Moody. They rate the carrier on their credit risk--how willing and likely they are to meet their financial obligations in a timely manner.

Is Term Life Insurance for You?

Here are some common situations where term life may be the best option:

� You have a spouse and children who depend on your current income.
� You have debts to pay off that your family cannot afford without your income.
� Your future income would assist in paying for your children's educations.
� You do not have enough savings to cover your funeral expenses and outstanding debt.
� You have a group life insurance benefit where you work, but it only keeps your family stable for a short period of time.

One of the main reasons that people choose term life insurance is for income replacement. After you retire, you most likely will not have children at home who are still dependent.

Finally, if you see any reason that, no matter at what age you die, you need insurance, you may want to look at whole life insurance instead. Some common reasons to have whole life insurance are a large estate that may incur heavy taxes or a disabled dependent who will never be able to fully provide for them self.

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