Information and Facts Need to Know About Term Life Insurance
Term life insurance is a traditional life insurance policy. It can be traced back as one of the oldest, cheapest and commonly used forms of life insurance. It was the preferred choice because of the fixed premiums and the benefits available after demise of the policy owner. Term life insurance, as the name suggests is for a fixed period of time. This period of time is predetermined by the policy owner and the insurance company according to the relevant details. For example, an employed individual might choose such a term insurance policy which expires in time with his retirement. Thus the individual would have accumulated sufficient funds for a secure future of his dependents and at the same time he would not be bothered about paying any premiums post-retirement.
Are you wondering how these insurance rates determined are? From the very beginning, you must understand that term life insurance rates varies from one person to another depending on a variety of characteristics like age, medical history, number of dependents, occupational hazards etc. If you choose to sign for a term life insurance policy at a young age, you can be sure to strike a much better deal in comparison to any other person who is perhaps in the same occupation and same health condition but is older.
Second, there are two types of term life insurance policies: annual renewable term and level term life insurance.
Annual renewable term life insurance requires you to pay premium for a year. During this one year, if the policy holder dies, the benefits are passed on to his dependents, otherwise, the policy expires on the very next day after the end of the 1 year tenure. You can apply for a renewal but the premium amount may not be the same. It depends on the company whether your policy is renewed or not and if so, then at what rate. Level term life insurance policy is preferred by the young and working class. Here you can fix the tenure like 10, 15 or 20 years and pay a fixed annual premium every year.
Before issuing a life insurance policy, a thorough health check is done on the ‘to be policy holder’. If the doctor shows records of a terminal illness, then the life insurance policy can be denied. If the tests detected a heart disease, the person might be able to obtain the term life insurance policy but at a much higher rate. If the person is a smoker or tobacco consumer, she can be rest assured that is up for tough times ahead from insurance companies and most likely is going to be charged more and be given less cash benefits than non smokers.
Last but not least, your occupation also determines the life insurance rates. Of course, a factory site manager of a nuclear power plant will get a higher life insurance quote than a bank manager.