Term Life Insurance Policy Protects Against Loss of Assets

2007-03-08 10:33:40

( Insurance )



A term life insurance policy provides coverage for a limited period of time (or term) only. You basically have two choices when you buy a life insurance policy: term life or whole life. You usually take out a whole life insurance policy to provide additional cash to the family in the event of your unexpected death. Ideally, a term life insurance policy should cover all your debts; in this way, it ensures that your family will not lose the house or other valuable assets you bought for them, in case you die or become disabled.

The key difference between a whole life insurance policy and a term life insurance policy is that there is no savings or investment element in term life and so its annual premium is considerably lower than for a whole life insurance policy. A term life insurance policy pays the amount insured if you die within the term; if you don’t die, nothing is paid out. In whole life insurance, your family still gets cash from the death benefits in the event of death.

In a sense, a term life insurance policy has similar objectives as a car insurance policy and a homeowner’s policy: to protect you and your family from losing assets in the case of unforeseen events happening to you. Usually a term life insurance policy is bought to ensure that the mortgage on the house will be fully paid in the case of death or disablement, so that your family will keep the house. Similarly, a car insurance policy is bought to protect your assets from losses due to accidents. Homeowner’s coverage insures the house itself, its contents and possible liabilities, similar to the State Farm Homeowners Policy.

Term life insurance policy provisions and costs vary from company to company, so you should shop around to get the best insurance policy that fits your needs. If your needs are not too sophisticated, you may even buy an insurance policy online, where quotes are generally lower because the insurance company saves on marketing costs by selling online.


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