When purchasing life insurance, you will have to decide whether to purchase term or permanent life cover. Sometimes, you can even purchase a combination of both. However, understanding the differences and workings of the policy will help you know which one will be best for you. Below is an overview of the policies:
Term Life Insurance Policy
With a term life policy, a benefit is only paid if the policyholder dies. The policy can be taken for a number of years (terms), usually 10, 20 and 30-year terms. If you live past the term of the policy, neither you nor the beneficiaries you had designated get any money.
Benefits of Term Life insurance
Term life is the most basic insurance policy and is typically cheaper when the risk of death is low. The premium charged for a cover increases with the age of the policyholder and increasing risks. For most people, term life insurance is the best option since it allows one to choose the length or term and amount of coverage to purchase. The coverage amounts can range from £100,000 to several million pounds.
Term life insurance can be used to cater for short term needs. For example, you can purchase a policy that expires when your children finish college. This will ensure that your children continue with education should you pass on. Another example is with regards to your home mortgage. By purchasing a cover that expires at the end of your mortgage payments, you will be sparing your loved ones from the financial burden of paying for your debt if you die before clearing it.
Permanent Life… Read the rest...