Term Life Insurance

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When it comes to protecting your loved ones financially, life insurance can provide valuable peace of mind.

One of the most common types of life insurance is term life insurance. Although nobody wants to think about the possibility of passing away prematurely, having a term life insurance policy in place can help provide peace of mind should the unexpected happen.

In this article, we’ll explore what term life insurance is, how it works, what the different types are, and how it differs from other types of life insurance.

What is Term Life Insurance?

Term life insurance is a type of insurance policy that provides coverage to the policyholder for a specific period of time, typically ranging from one to thirty years.

The policy pays out a death benefit if the insured person passes away during the term of the policy. If they don’t pass away during the term, nothing is paid out, and the policy expires.

For example, if you purchase a 20-year term life insurance policy and pass away within those 20 years, your beneficiaries will receive a payout from the insurance company.

It’s important to note that term life insurance does not accrue any cash value over time, as permanent life insurance policies do. Additionally, once the term of the policy ends, the coverage will stop unless additional premiums are paid to renew it.

Who Needs Term Life Insurance?

Term life insurance can be a critical financial tool for individuals who have dependents who rely on their income to pay bills or cover living expenses.

If something were to happen to the insured person, their beneficiaries would receive the death benefit payout, which could help them maintain their standard of living and cover expenses like mortgage payments or college tuition.

Since term life insurance is generally less expensive than permanent life insurance, it’s an excellent option for individuals who don’t have the budget or don’t need the additional features provided by permanent life insurance policies.

Types of Term Life Insurance

There are different kinds of term life insurance, with subtle but distinct ways in how their policies operate. Here are the most common types of life insurance.

  • Level Term Policy. Also called the Level-Premium policy, this coverage locks in the premiums that the policyholder has to pay for its duration, which can be 10 to 30 years.
  • Yearly Renewable Term Policy. Shortened to YRT policy, this type of term insurance doesn’t have a definite duration, so you can re-evaluate your needs every year without consequences.
  • Decreasing Term Policy. This kind of policy affixes your premiums to a certain amount for the duration of the policy (10-30 years), but benefits will be lower each year.

Prior to choosing a term insurance policy, it’s vital to assess your own individual requirements. This will help you select the best plan for your specific situation.

How Does Term Life Insurance Work

When you purchase term life insurance, your insurance company will check your basic information to determine your premiums. They will largely base their assessment on factors such as the following:

  • Age
  • Employment
  • Lifestyle
  • Hobbies
  • Medical history

You’ll have to pay the premium for the whole duration of your term, which can be for a specified number of years, such as 10, 20, or 30 years, or it can be until a certain age, such as 75 or 100.

Term Life Insurance Rates by Age

Term life insurance is typically more budget-friendly than other forms of life insurance since it only provides protection for a specified period. This results in lower premiums than permanent policies, which provide lifelong coverage and cash value features.

That said, the rates can still vary wildly depending on the age of the policyholder. Generally speaking, younger people tend to pay much less than older individuals since they are considered lower risk.

Here are the average term life insurance rates in the United States categorized by age and gender.

Get the Best Term Life Insurance With Magnum Insurance

Term life insurance is a critical investment that will keep your loved ones safe should you meet an untimely end. To get the best benefits that your money can buy, you need a reliable and efficient insurer that won’t let you down.

Magnum Insurance is all that and more. Our goal is to provide you with the best term life insurance you can get for your money. We offer various life insurance plans to suit your needs and provide excellent customer service in case you need any help with your policy.

To get started, reach out to us for a free quote!

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