Term life assurance and term life insurance is the same thing, and the word “assurance” is only used for marketing purposes. Life insurance is a way to protect a family in the case of an unexpected death of one of the breadwinners in the family.
There are many different types of life insurances, such as whole life, term life, universal or variable, but going with term life assurance is the least expensive type of coverage while still giving you the maximum amount of coverage you may need.
The way term life assurance works is that it will pay upon the death of the person who is insured. Because there is no cash value or savings associated with this type of policy, it is the cheapest form of life insurance. It is sold in “terms”, ranging from 1 year up to 30 year terms, and is renewable after each term.
The cost of life insurance increases as you get older. This is because the older you get, the chances of your death also increases. Insurance companies use a mortality table that determines the cost of insurance per $1000 of coverage. Although your cost will go up every year, the price you pay for the term stays the same.
Advantages to term life assurance are many. The main advantage is how inexpensive it is in the early years of the policy. An example of this is that a family in their 20s can easily get a $200,000 policy for only about $18 to $20 a month, where the same whole life policy could easily cost $60 or $70 a month. This is because in the early years, the term life insurance is purely insurance and the older you get, the risk of the insurance paying out grows.
A major disadvantage to term life assurance is that at the end of the term, you are no longer covered. You must renew your coverage after every term and will have to go through the medical exams and questions all over again. If you fail these examinations, the insurance company can decide not to renew your policy, or you may end up paying a higher premium than before.
The best way to get your term life assurance policy is by getting a large term, such as a 20 or 30 year term, when you are young. A separate investment program should also be included. The term insurance policy will cover the family in the event of an untimely death, while the investment account will keep growing. After a few years, the investment portfolio will allow the family to be “self-insured” in the event of a death.
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