Term Life Insurance-Origin And Features
Why is it called ‘Term’?
The name itself suggests the meaning. Since this type of insurance provides coverage for a certain limited period it is called term life insurance. Most often it is for 1, 5, 10, 15 or 20 years. This is the same reason why it is also called ‘temporary’ insurance.
If death occurs during the term, the policy pays cash benefits to the beneficiary. However, when this term is over and the policy is not renewed, then the policy ceases to operate. If death occurs after the policy term is over, the beneficiary will not receive any cash benefits.
What are the Features of Term Life Insurance?
Initial Affordability: If you need to budget your expenses but still want to provide financial security to your family, you will find that you are easily able to afford term life insurance.
Adjustable Premiums: These plans have adjustable premiums and so the different policy providers for seniors in the US may raise or lower premiums at some point specified in the policy. This will be based on the projected changes of investment earnings, mortality experience, persistence and expenses. In any case the premiums may never be raised beyond the maximum that is mentioned in the policy.
Renewability: Some of the term life insurance plans are renewable. They allow you to buy more coverage after the original coverage period is over. However, each time you get your policy renewed, your premium will increase accordingly. This increased premium will depend mostly on your age. Depending on the type of policy, you will have the option to renew only for a limited period.
Conversion: As a beneficiary of the term life insurance policy for seniors, you also have the advantage of converting your policy. This benefit is available only to certain policies. You may convert your policy to a whole life insurance or even endowment insurance depending on certain criteria. Check with your insurance provider to find out if conversion is allowed in the policy that you have opted for.